Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Michael DeBoer (DeBoer), in May 2016, was barred by FINRA over allegations of DeBoer, in June 2010, while registered with brokerage firm Dalton Strategic Investment Services Inc. (Dalton Strategic), DeBoer recommended two customers invest $200,000 in securities offered by IST – software development company. FINRA found that DeBoer received $32,000 in compensation from the software development company for the referrals. The investors ultimately lost the entirety of their investments. Further, FINRA found that DeBoer did not disclose his participation in the transactions to his brokerage firm before making his recommendation.
In addition, FINRA also alleged that from November 2010 through December 2012 DeBoer marketed to his customers and other potential investors to HSG, a commodities and futures trading entity. According to FINRA, DeBoer received more than $70,000 in payments from the futures trading entity in return for his referral of approximately 28 people who collectively invested more than $1.8 million. FINRA also found that most or all of the people DeBoer referred to the futures trading entity lost a substantial amount of the money they invested.
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. 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”.