Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ricky Flatt (Flatt) has taken loans from a client and engaged in certain business activities not approved by his advisory firm. Flatt, formerly registered with Royal Fund Management, LLC (Royal Fund) out of Troy, Michigan has been terminated by Royal Fund and under investigation by the State of Michigan for accepting funds from a client. In addition, Flatt disclosed at least 12 tax or judgement liens totaling hundreds of thousands of dollars.
In March 2019 the State of Michigan opened an investigation into Flatt alleging that he borrowed money from a client and defaulted on the loan while also failing to disclose an outside business activity.
In March 2019 Royal Fund terminated Flatt after alleging that Flatt breached the firm’s internal policies and procedures concerning reporting business activities and loans from a client.
Flatt’s IARD disclosures state that Flatt has an outside business activity called Financial Strategies, Inc. selling certain insurance policies. It is unclear at this time what business activity that investigations concern.
Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling fraudulent securities sales. Flatt’s activities in 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.
When advisors convert or misappropriate funds they often create businesses or other vehicles to serve as a cover for the theft 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.
Flatt entered the securities industry in 1994. From January 2014 until March 2019 Flatt was registered with Royal Fund out of the firm’s Troy, 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.