PFS Investments

Advisor Diane Zhu Investigated Over Undisclosed Outside Business Activities

October 11, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Diane Zhu (Zhu) engaged in undisclosed outside business activities (OBAs) that were not approved by the brokerage firm. Zhu, formerly registered with PFS Investments Inc. (PFS Investments) was subject to a regulatory investigation according to records kept by The Financial Industry Regulatory Authority (FINRA). In addition, Zhu disclosed one employment termination for cause.

In July 2019, FINRA alleged that Zhu accepted a bar from the financial industry, without admitting or denying the findings, that she refused to provide documents and information requested by FINRA in connection with FINRA’s investigation into Zhu’s outside business activity that led to her termination from her member firm.

In November 2018 Zhu was discharged by PFS Investments after the firm claimed that she engaged in an undisclosed outside business activity.

At this time it is unclear what the activity was that was the focus of FINRA’s investigation or the scope of Zhu’s activities. Zhu’s publicly available BrokerCheck information discloses several OBAs including the sale of home security and automation products and a company called Stars Accounting which appears to be a tax accounting business. It is unknown whether the activity investigated by FINRA involves any of these entities.

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 through OBAs. 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. Continue Reading

Derrick Trussell Barred Over Unapproved Product Sales – Investor Recovery

May 27, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Derrick Trussell (Trussell) has engaged in an investment fraud scheme by selling products not approved by his brokerage firm. Trussell, formerly registered with PFS Investments Inc. (PFS Investments) out of San Antonio, Texas has been accused by at least four customers of engaging in unapproved activity.

In May 2017 PFS Investments terminated Trussell after alleging that the firm received allegation that the representative engaged in an unapproved outside business activity and/or an undisclosed private securities transaction in which a client’s funds were used to purchase securities not offered by PFSI without the client’s knowledge or consent.

Thereafter in August 2018 FINRA barred Trussell after FINRA stated that Trussell failed to respond to FINRA request for information.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in fraudulent securities sales or misappropriation schemes. Trussell’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.

FINRA Bars Perry De Leeuw Over Private Securities Sales

January 21, 2017 | by Staff Attorney

Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Perry De Leeuw (De Leeuw) – a/k/a Perry De Leeun, Perry Deleeuw. According to brokercheck, in June 2016 De Leeuw failed to respond to FINRA’s requests for information resulting in a bar.

The FINRA investigation followed De Leeuw’s termination from his previous employer, PFS Investments Inc. (PFS Investments) in April 2016. At that time, PFS Investments terminated De Leeuw alleging that he engaged in unapproved outside business activities and failed to adequately cooperate with the firm in investigating a customer complaint.

That customer complaint filed in April 2016 alleged that in 2015 the customer invested $163,350 with De Leeuw to become a distributor for a company called Waterbos. In total De Leeuw has been subject to at least four customer complaints concerning outside business activities and private securities transactions.

FINRA Bars Former PFS Investments Broker Malcolm Babin From the Industry

September 20, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred (FINRA AWC No. 20150454876-01) former PFS Investments, Inc. (PFS Investments) broker Malcolm Babin (Babin) after the broker failed to respond to a letter from the regulator requesting information. While BrokerCheck records kept by FINRA do not disclose the nature of the regulatory inquiry, in May 2015, Babin was permitted to resign from PFS Investments stating that the broker was terminated for 1 being involved in a misappropriation; 2) unlicensed security solicitation, and 3) an undisclosed outside business activity and potentially a private securities transaction – also referred to in the industry as “selling away.”

Babin entered the securities industry in 2007 with PFS Investments as a Series 6 broker. A Series 6 license only allows the broker to solicit variable contracts and open-end mutual funds and does not allow the broker to solicit general securities. FINRA alleged that on July 7, 2015 FINRA was investigating allegations that Babin converted customer funds and engaged in undisclosed outside business activities. FINRA requested that Babin provide documents and information by July 14, 2015. The regulatory stated that they received an email from Babin acknowledging receipt of FINRA’s requests for documents but informed staff that he would not cooperate. Consequently, the regulator barred Babin from the securities industry.

The conduct alleged against Babin constitutes a potential “selling away” securities violations. 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.

Former PFS Investments Broker Michael Korson Barred Over My Coupon Genie Investment Sales

April 8, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently sanctioned and barred broker Michael Korson (Korson) concerning allegations that from February 2011 through August 2012, Korson failed to disclose to PFS Investments, Inc. (PFS) his involvement with an outside business (also referred to as “selling away”) called My Coupon Genie, Inc. (My Coupon Genie). In addition, FINRA alleged that between September 2011 and May 2014, while registered with PFS and also HBW Securities LLC (HBW) Korson participated in private securities transactions involving My Coupon Genie without providing prior written notice to either firm. FINRA also found that Korson misused My Coupon Genie investor funds by charging personal expenses to the company’s credit card.

Korson first became registered with FINRA on in 1991 as an Investment Company Products/Variable Contracts Representative (Series 6) representative with PFS. Thereafter, on February 21, 2013, Korson’s registration with PFS was terminated and from January 27, 2014 through July 21, 2014, Korson was registered with HBW.

According to FINRA, Korson is the founder, chief executive officer, board member, and majority owner of My Coupon Genie, which purports to provides an on-line platform for retailers to share promotional offers on goods and services with consumers. PFS required its brokers to disclose and obtain preapproval for all outside business activities. FINRA found that PFS received notice of Korson’s involvement in My Coupon Genie on August 2, 2012, 18 months after Korson’s first involvement in the company.

FINRA Bars Broker David Blasik Concerning Allegations of Outside Business Activities

March 4, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned and barred broker David Blasik (Blasik) concerning allegations that Blasik engage in outside business activities. When the outside business activity also includes the recommendation of investments the activity is referred to in the industry as “selling away.”

FINRA Rule 8210 authorizes the regulator to require persons associated with a FINRA member to provide information with respect to any matter involved in the investigation. In December 2014, FINRA alleged that it pursued an investigation into allegations that Blasik engaged in undisclosed outside business activities. FINRA requested that Blasik provide documents and information to the agency. On December 30, 2014, FINRA stated that Blasik emailed the regulator and stated that he would not provide information or cooperate in the investigation.

According to Blasik’s brokercheck he has disclosed outside business activities including his tax preparation company. Blasik’s disclosures also reveal that he has been employed or involved with Commercial Metal Fabricators, Gateway Sports MGM, and DMH of Ohio, Inc. It is unclear at this time what organization Blasik was involved with that FINRA was investigating.