Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisor Christopher Roumayeh (Roumayeh) has been accused by a financial regulator of engaging in undisclosed outside business activities (OBAs) and private securities transactions among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Roumayeh was employed by his prior employer Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) prior to being investigated concerning his activities. If you have been a victim of Roumayeh’s alleged misconduct our firm may be able to assist you in recovering funds.
In May 2020, Roumayeh was sanctioned by FINRA which found that he consented to sanctions and the findings that he engaged in outside business activities without providing prior written notice to his member firm. FINRA found that Roumayeh and a firm customer purchased a franchise involved in the professional video gaming industry. FINRA alleged that Roumayeh managed the franchise’s day-to-day operations, formed corporate entities related to the franchise’s operations, served as an officer and director for them, and solicited prospective investors in the franchise. Roumayeh further is alleged to have concealed his relationship with the entities by forming them in his wife’s name and named her as the sole authorized representative on an entity’s bank account.
In addition, FINRA also found that Roumayeh engaged in other OBAs such as forming and managing a separate limited liability company that he purchased commercial real estate through. Roumayeh then is alleged to have made false statements to the firm on annual compliance questionnaires concerning his outside business activities. Finally, FINRA also found that Roumayeh participated in a private securities transaction by soliciting and facilitated the investment of a publicly-traded company in the franchise. Roumayeh’s is alleged to have participated in identifying other potential investors, responding to questions from the company during its due diligence, and negotiating the terms and structure of the company’s investment. To facilitate the company’s $5.5 million investment, FINRA claims that Roumayeh formed a new holding company that he sold and issued shares of preferred stock to the company through.
Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling securities sales through OBAs. The sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. 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. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.
However, federal securities laws and the FINRA rules require firms to 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.
Roumayeh entered the securities industry in 2002. From November 2008 until July 2019 Roumayeh was associated with Merrill Lynch out of the firm’s Bloomfield Hills, Michigan office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors 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.