Securities Lawyers Blog
The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Garland Benton (Benton). There are at least 3 customer complaints against Benton, one of which appears to be filed in connection with the solicitation of private securities transactions. In addition, there is one employment separations disclosed. One customer complaint alleges that Benton caused $946,670 in damages by failing to conduct due diligence on an investment while the firm has responded that the Benton was not a representative of the customer. In April 2015, Reef Securities Inc. (Reef) terminated Benton stating that the broker was permitted to resign after allegations were made that Benton failed to follow firm policies and procedures regarding private securities transactions from 2008. The conduct allegedly engaged in by Benton is also referred to as “selling away” in the industry.
Benton entered the securities industry in 2002. Between October 2002 and April 2015, Benton was associated with Reef.
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.