Securities Lawyers Blog
Accor
ding to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Oscar Francis (Francis), formerly associated with MML Investor Services, LLC (MML) in Ft. Lauderdale, Florida, was terminated for cause by MML concerning allegations that he engaged in private securities transactions. MML stated that Francis’ was “terminated in connection with an investigation into an undisclosed outside business activity, potential selling away and an unauthorized non-securities life insurance transaction.” In addition, Francis has been subject to three customer complaints concerning unapproved investments. Further, in April 2017, the Department of Justice opened an investigation into Francis’ investment activities.
At this time it is unclear the extent and nature of the outside business activities or private securities transactions that occurred. The allegations concerning private securities transactions 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. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly 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.