Securities Lawyers Blog
According to BrokerCheck records Brian Murphy (Murphy) has been sanctioned and barred by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker failed to respond to the regulator’s requests for information. In July 2016, Murphy was terminated by his firm Signator Investors, Inc. (Signator) on allegations that Murphy admitted to conducting an unapproved outside business activity. In the industry all such activities must be disclosed and approved by the firm before the broker can engage in them.
Murphy has been terminated by three employers in total during his career. In November 2014 Murphy was terminated by MetLife Securities, Inc. (MetLife) for making a representation that he had a professional designation that he did not in fact possess. In addition, Murphy has been subject to a number of customer complaints concerning the sale of variable annuities.
At this time it is unclear what outside business activity Murphy was engaged in. However, the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.