On February 28, the Montana Securities Department reached a $5.7 million settlement with FSC Securities Corp., involving former broker Barry Hartman and Invizeon Corporation.
Hartman was barred from the securities industry in August 2015 amidst allegations that he participated in private securities transactions by personally investing $450,000 in Invizeon Corporation, a Missoula-based software business.
The charges stated that Hartman was “selling away” by recommending that his customers also invest in Invizeon without complying with firm procedures. “Selling away,” is a term used when a financial advisor solicits investments in companies that aren’t preapproved by the broker’s affiliated firm.
The complaint alleges that Hartman was a beneficial owner and director of Invizeon. The company reportedly closed in 2015 and investors lost their entire investment as a result, according to reports.
Additonally, 12 of Hartman’s clients purportedly purchased Invizeon, and 26 clients were reportedly sold unsuitable investments based on their financial objectives, age and needs.
FSC fired Hartman in March 2015 for violating “firm policies, to include (his) participation in an undisclosed outside business activity and an undisclosed private securities transaction,” according to his FINRA BrokerCheck report. Hartman has 21 customer complaints listed on his broker report.
Under the terms of the deal reached between FSC and Montana Securities Commission, FSC will pay more than $1.3 million in restitution, including $1.1 million in principal and more than $230,000 in interest to FSC clients who invested in Invizeon.
The company will also offer more than $1.4 million in rescission, including nearly $1.2 million in principal and $130,000 in interest to FSC clients who purchased unsuitable, illiquid investments.
Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses.
The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.
If you suffered losses investing with Barry Hartman and FSC Securities Corp., the attorneys at The White Law Group may be able to help you. For a free consultation, please call (888) 637-5510.
The foregoing information, which is all publicly available, is being provided by The White Law Group.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. For more information, please visit our website, www.whitesecuritieslaw.com.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.