Articles Tagged with outside business activity

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Eric L. Swenson.  Mr. Swenson was last employed and registered with PNC Investments, from the broker-dealer’s Fort Pierce, Florida office, from November 2014 to October 2016, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was previously registered with Scottrade, Inc. from October 2003 to January 2014, according to BrokerCheck records.

In 2016, Mr. Swenson was fined and suspended from association with any FINRA member broker-dealer for nine months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014039902901.  According to the AWC, Mr. Swenson violated FINRA Rules 3270 (Outside Business Activities of Registered Persons) and FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) because he did not inform his registering firm about his outside business activity, Impact Energy Gum, Inc.  The AWC detailed that while Mr. Swenson told his firm that he would be an investor in the company, which activity was approved, he did not disclose that from July 2012 through December 2013, he also contacted potential distributors, exporters, equipment vendors and lessors on behalf of Impact and was involved in attempts to solicit potential investors to purchase securities of Impact and obtained a short-term loan to Impact from a family member.  The AWC stated that Mr. Swenson did not fully disclose the extent of his involvement with Impact, in violation of Rule 3270.

Mr. Swenson’s BrokerCheck records detail that he was permitted to resign and was discharged from PNC Investments and Scottrade, respectively, amidst allegations of failing to fully disclose information regarding his outside business activity.

One of the well-known and strictly enforced rules in the securities industry is that brokers should not enter into undisclosed private loan transactions with their clients.  A Letter of Acceptance, Waiver and Consent (AWC) was recently accepted by the Financial Industry Regulatory Authority’s (FINRA’s) Department of Enforcement from Paul F. Gans, Jr., who was employed as a registered broker by Raymond James Financial, Inc. up until November 2014.  According the AWC, Mr. Gans inappropriately loaned money to a “family friend” in exchange for a three-year promissory note bearing 8% annual interest, without disclosing the transaction to his employer and ensuring it complied with his employer’s policies and procedures.  Mr. Gans was accused by FINRA of violating FINRA Rule 3240 (Borrowing from or Lending to Customers) and Rule 2010 (Standards of Commercial Honor and Principles of Trade).

Rule 3240 prohibits brokers from borrowing from or lending to customers, unless the transaction is permitted by the employing firm after disclosure and in compliance with the firm’s policies and procedures.  According to the AWC, Mr. Gans did not disclose the promissory note transaction to his employer.

As detailed in the AWC, Mr. Gans was suspended from association with any FINRA member for ten business days, and fined $5,000.  The firm, Raymond James Financial, Inc., disclosed on FINRA BrokerCheck that Mr. Gans was discharged for his lack of disclosure of an outside business activity, which may or may not refer to the promissory note transaction.  It was also disclosed on FINRA BrokerCheck that Mr. Gans was also discharged from his prior employer Morgan Stanley Dean Witter in 2000 for also violating that firm’s policies and procedures, that time for mailing correspondence without prior approval.  FINRA BrokerCheck also revealed that Mr. Gans was the subject of one customer complaint in 1994 for allegedly failing to inform a client in the decline in value of a “mutual investment,” which claim was settled by Morgan Stanley Dean Witter.