The FINRA investigation followed De Leeuw’s termination from his previous employer, PFS Investments Inc. (PFS Investments) in April 2016. At that time, PFS Investments terminated De Leeuw alleging that he engaged in unapproved outside business activities and failed to adequately cooperate with the firm in investigating a customer complaint.
That customer complaint filed in April 2016 alleged that in 2015 the customer invested $163,350 with De Leeuw to become a distributor for a company called Waterbos. In total De Leeuw has been subject to at least four customer complaints concerning outside business activities and private securities transactions.
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”. Often times brokers who engage in this practice use outside businesses in order to market their securities.
De Leeuw entered the securities industry in 2004. Since September 2004 De Leeuw was registered with PFS Investments out of the firm’s Duluth, Georgia office location.
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.
The investment fraud attorneys at Gana Weinstein LLP have represented hundreds of investors in securities related disputes including 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.