David Darrell Anthony, a former broker at Denver, Colorado based Multi-Financial Securities Corporation, now known as Cetera Advisors LLC, submitted an Offer of Settlement in which he consented to the described sanctions and to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he facilitated investors' tax clients and firm customers' involvement in a private securities transaction by introducing, discussing and referring them to Integrity Capital LLC for investment purposes. The findings stated that the clients and customers invested a total of $400,000 in the entity by purchasing Integrity Capital Promissory Notes offered by the entity, which are now in default. Although the promissory notes were purportedly secured, perfection of the security interest was dependent on the note purchasers' filing financing statements, and no financing statements were signed by the entity or provided to the purchasers. The client and customers were induced to purchase the promissory notes by the promised return of 9 percent interest rate per annum.
FINRA's findings also stated that Mr. Anthony failed to provide any written notice to his firm of his intention to participate in the sale of these promissory notes by introducing, discussing and referring his tax clients and customers to the entity, which led to the purchase of the entity's promissory notes, and Mr. Anthony did not receive written approval from the firm for his involvement. Mr. Anthony understood that he could apply for a commission of 1 percent to 2 percent of the amount invested by promissory note purchasers he referred to the entity. The findings also included that Mr. Anthony's recommendation of the entity to a customer was unsuitable on the basis of the customer's other securities holdings, financial situation and needs; the $100,000 constituted approximately 56.5 percent of the customer's liquid worth, resulting in an unsuitable overconcentration of her liquid assets, which exposed her to a risk of loss that exceeded her risk tolerance and investment objectives.
Mr. Anthony, of Mobile, Alabama, was fined $7,500 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Mr. Anthony's re-association with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. The suspension is in effect from May 6, 2013 through November 5, 2013.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to unauthorized and/or unsuitable investments can bring forth claims to recover losses against broker-dealers like Multi-Financial Securities Corporation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.