Was this a case of a broker who did “too much” for his clients, Aaron Parthemer’s attorney claimed in an InvestmentNews news article dated April 23, 2015? One thing is sure: the Financial Industry Regulatory Authority (FINRA) has barred Aaron Parthemer from associating with any FINRA member broker-dealer in any capacity for violating industry rules by participating in private securities transactions, outside business activities, and for making loans to his clients, according to FINRA Letter of Acceptance, Waiver and Consent No. 2011030405801 (AWC). Each of these items alone could be sufficient for termination of a broker from their employing broker-dealer. The conduct detailed in the AWC spanned a time when Mr. Parthemer was employed and licensed to recommend the purchase and sale of securities by Morgan Stanley Smith Barney LLC from June 2009 through October 2011, and from October 2011 through March 2013 with Wells Fargo Advisors, LLC.
According to the InvestmentNews article, Mr. Parthemer was a Miami “socialite” who was a financial advisor to a number of NFL and NBA players and had his picture taken with such celebrities as Chris Brown and Nicki Minaj. According to the AWC, Mr. Parthemer was barred for a number of securities industry violations, including involvement in outside business activities in violation of FINRA Rules 3270 and 2010 and NASD Rule 3030. The AWC detailed that Mr. Parthemer worked as a President and Chief Executive Officer of a Miami nightclub (identified by the InvestmentNews article as “Club Play”) and also marketed an international tequila brand. Brokers are permitted to operate outside business activities if they are disclosed and approved by their employing broker-dealer. Disclosure and approval is required in order to ensure that inappropriate securities transactions do not occur outside the supervision of the broker-dealer.
Mr. Parthemer was also barred for providing approximately $400,000 in loans to certain securities customers, in violation of FINRA Rule 3240. Rule 3240 makes it clear that loans to or from clients are only permitted in certain limited circumstances where disclosure is made to the employing broker-dealer and such loan is approved. Supervision by broker-dealers is necessary, again to ensure that there are no violations of securities laws or industry rules occurring. The AWC noted that the loans made by Mr. Parthemer were never disclosed to Wells Fargo.
In addition, Mr. Parthemer was barred for participating in private securities transactions by recommending that certain of his clients invest in an internet startup company, in violation of FINRA Rule 3040. Like the activities listed above, a broker must disclose a private securities transaction to his/her employing broker-dealer, who must then approve or deny the transaction. If the transaction is approved, the broker-dealer must place the transaction on its books and records and supervise the transaction as if it were any other security offered by the firm. The AWC noted that Mr. Parthemer never disclosed his private securities transactions to either Morgan Stanley or Wells Fargo.
Malecki Law has previously investigated and successfully handled securities arbitrations concerning issues related to outside business activities, loans to customers and private securities transactions with public investors that should have been supervised by the employing broker-dealers. If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.