Lincoln Financial Advisor Corp. has been ordered by the Financial Regulatory Authority (FINRA) to pay $4.43 million in damages and interest to 22 investors for not preventing a brokerage manager from selling away. Scott B. Gordon, now barred from the securities industry by FINRA, ran Healthright Corp. from his Lincoln Financial office in Salt Lake City, Utah for nearly one year until a Healthright investor discovered misstatements and omissions by Mr. Gordon. In its decision, the FINRA panel noted that Lincoln Financial was negligent by not supervising of Mr. Gordon's activities. In fact, a written request by Mr. Gordon to Lincoln Financial seeking permission to conduct outside business activity was completely ignored.
Selling away is the inappropriate practice of an investment professional that sells or solicits securities or investments not held or approved by the brokerage firm with which the professional is associated with. Under NASD and FINRA rules, brokerage firms must approve investments offered by their investment professionals and supervise its sales. Lincoln Financial can be held liable for Mr. Gordon's activities because it either failed to establish a reasonable supervisory system, or because it failed to implement an existing reasonable supervisory system. Even if Lincoln Financial did not know of Mr. Gordon's activities, it can still be liable to investors for damages for failing to prevent Mr. Gordon from using an outside business to raise investor capital.
Are you a Lincoln Financial Advisor Corp. client who invested in Healthright Inc. through Scott B. Gordon? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
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. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.