Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Walter Starghill (Starghill), in March 2017, was discharged by brokerage firm Lincoln Investment over allegations of Starghill’s “participation in a private securities transaction in violation of Firm policy.” In the industry all securities transactions, private investments, loans, or other financial transactions with the investing public must be disclosed and approved by the firm before the broker can engage in them.
At this time it is unclear what outside business activity Starghill was engaged in. According to Starghill’s disclosures he was involved with TSG Transportation LLC – a transportation service. FINRA requires brokers to disclose their outside businesses because the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities. In addition, Starghill obtained a Series 6 license as opposed to a broader Series 7 license. A Series 6 license is a very limited license that only allows brokers to sell variable annuities and open end mutual funds. Sometimes brokers with Series 6 licenses engage in private securities transactions due to their limited license.
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.
Starghill entered the securities industry in 2010. From February 2010 until July 2011, Starghill was registered with Chase Investment Services Corp. From September 2011 until December 2013 Starghill was associated with NYLife Securities LLC. Finally form March 2014 until March 2017, Starghill was associated with Lincoln Investment out of the firm’s Southfield, Michigan office location.
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.