Thereafter in January 2018 FINRA found that Solomon solicited seven investors to purchase a total of $1,400,000 in interests in a private placement without providing his firm written notice of that activity or obtaining the firm’s written approval prior to doing so. FINRA found that Solomon first provided written notice of his sales activity to his firm after responding to inquiries made by FINRA during an examination of the firm. FINRA suspended Solomon for 12 months and imposed a fine.
At this time it is unclear the extent of Solomon’s outside business activities or private securities transactions. Solomon disclosed a number of outside business activities including that he is the control person limited partnerships, is involved with Devon Park Partnership, Horsham Business Center, and 1000 Howard Blvd Partners LP.
The FINRA allegations concern private securities transactions – 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. When advisors convert or misappropriate funds they often created businesses or other vechicles to serve as a cover for the theft of funds. Firm attempt to disclaim liability for the theft of funds by their brokers by claiming ignorance of their advisor’s activities. 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.
Kitts entered the securities industry in 1987. From 1982 until November 2013, Solomon was associated with CMS Investment Resources, LLC. From November 2013 until January 2016 Solomon was associated with M Holdings out of the firm’s Wynnewood, Pennsylvania 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.