Securities Lawyers Blog
Broker William Larry Hogue, Jr. (Hogue) has been suspended and fined by the Financial Industry Regulatory Authority (FINRA) concerning allegations that Hogue participated in an outside business activity without providing written notice to Cambridge Investment Research (Cambridge) his employing brokerage firm in violation of FINRA rules. Additionally, FINRA alleged that Hogue participated in private securities transactions by selling promissory notes totaling over $1 million to at least nine investors.
Hogue entered the securities industry in March 2001. In March 2005, Hogue became associated with Cambridge and with Investors Asset Management of Georgia, Inc. (Investors) as a registered investment advisor. In February 2012, Hogue was permitted to resign from Cambridge for receiving debt financing for outside business activities through the sale of promissory notes without firm approval.
FINRA alleged that Hogue and two other partners formed SFL, presumably SFL stands for Science Fitness LLC, on August 20, 2010, for the purpose of operating a health club. FINRA found that Hogue served as co-chief executive manager of SFL and was directly involved in the management of the health club. FINRA alleged that Hogue did not initially disclose this outside business activity to Cambridge but that Cambridge discovered Hogue’s involvement with SFL through a routine review of Hogue’s emails. Subsequently, Hogue disclosed the SFL to Cambridge on August 10, 2011. As a result of Houge’s failure to timely disclose his involvement in SFL FINRA found that Hogue violated FINRA Rules 3270 and 2010.
FINRA also alleged that in July 2011, Hogue financed SFL by participating in the sale of nine unsecured promissory notes totaling $1,150,000 ranging in the amounts of $50,000 to $200,000. FINRA found that Hogue retained counsel to draft the notes, signed the notes on behalf of SFL, and issued the notes to customers. FINRA found that Hogue did not provide prior written notice to Cambridge of his intent to participate in the sale of SFL promissory notes. Consequently, FINRA found that the promissory notes issued by violated NASD Conduct Rule 3040 and FINRA Rule 2010.
The allegations brought against Hogue constitute “selling away” misconduct. Selling away occurs when a broker solicits securities, promissory notes, or other investments away from the approval of the broker’s firm. Many investors do not learn that the broker’s private financial arrangements are wrongful until the promised return is not paid or the broker is sanctioned by securities authorities.
Brokerage firms deny liability for selling away claims by feigning ignorance to the transactions taking place. However, ignorance does not exonerate a brokerage firm’s failure to supervise their employees. The attorneys at Gana Weinstein LLP are experienced in investigating claims concerning private loans and securities dealings. Our consultations are free of charge and the firm is only compensated if you recover.