Securities Lawyers Blog
The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Royal Alliance Associates, Inc. (Royal Alliance) and the regulatory action filed by FINRA involving broker Darrin Farrow (Farrow). According to BrokerCheck records Farrow has been subject to one customer complaint, one employment separation for cause, and two regulatory actions.
According to Royal Alliance, the firm terminated Farrow after alleging Farrow received information that he was involved in an outside business activity not approved by the firm. Thereafter, in June 2016, FINRA suspended Farrow after alleging he participated in two undisclosed outside business activities (OBAs) without disclosing his involvement to his firm. (FINRA No. 2015045751101). FINRA found that Farrow founded an unincorporated entity that provides consulting services to the cannabis industry and also cultivates, produces, and manufactures cannabis and he also formed a Delaware limited-liability company that grows cannabis and supplies it to dispensaries throughout Oregon. According to FINRA Farrow participated in undisclosed private securities transactions with firm customers involving the sale of $1 million of membership interests.
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”. According to brokercheck records Farrow has disclosed OBAs listed as including MonsterShares LLC – an investment related business, Mad Farmaceuticals, DBF Properties, LLC, Adviceware, and MM Herndon LLC. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.