Articles Tagged with Jon Cox

The Financial Industry Regulatory Authority (FINRA) recently filed a complaint against LPL Financial LLC (LPL) broker Jon Cox (Cox) alleging that Cox may have engaged in unauthorized outside business activities, private securities transactions (a/k/a “selling away”), and/or unauthorized customer loans. According to Cox’s BrokerCheck, Cox was terminated in January 2014 by LPL on allegations of violations of the firm policy regarding outside business activities. Cox’s disclosures also reveal that he works for a DBA Investment and Retirement Services Group in Knoxville, TN. In addition he is a sales agent for Proton Power, Inc.

While details concerning Cox’s activities are still pending, the allegations against Cox are consistent with a “selling away” securities violation. Selling away occurs when a financial advisor solicits investments in companies or promissory notes that were not approved by the broker’s affiliated firm. Under the FINRA rules, a brokerage firm owes a duty to properly monitor and supervise its employees. In order to properly supervise their brokers each firm is required to establish and maintain a system to supervise the activities of each registered representative to achieve compliance with the securities laws. Selling away often occurs in environments where the brokerage firms either fails to put in place a reasonable supervisory system or fails to actually implement that system and meet supervisory requirements.

In selling away cases, investors are unaware that the advisor’s investment advice is not authorized and potentially illegal because the securities sold are often not registered with the SEC. Typically investors will not learn that the broker’s activities were wrongful until after the investment scheme is publicized or the broker simply shuts down shop and stops returning client calls.