FINRA requires employees of FINRA-member firms to disclose all outside business-related activities and all investments recommended to customers to the member firm. FINRA’s Department of Enforcement investigated Burke and found he disclosed to his employers that he operated a company called Lodge Alaska, LLC, a property management company in Alaska. However, Burke failed to disclose to either Synergy or Capital Investment that he sold shares in the business to an elderly investor. Specifically, the investor purchased $50,000 worth of units in Lodge Alaska, LLC.
In addition to soliciting the elderly investor to purchase shares in the business, FINRA also alleged Burke misrepresented several aspects of the business venture, including: 1) Burke and his wife owned Lodge Alaska, LLC; 2) Lodge Alaska, LLC did not in fact own any assets; 3) Lodge Alaska was not profitable or solvent. Finally, FINRA alleged Burke’s personal expenditures from the business exceeded his business-related expenditures, which resulted in Burke using a portion of the customer’s investment of his and his wife’s personal use.
Based upon the foregoing misconduct, FINRA alleges Burke violated numerous FINRA rules and regulations, including but not limited to NASD Conduct Rules 3040 and 3270, as well as FINRA Rules 2010, 2110, 2120, 2150(a) and 3270. For example, NASD Rule 3040 states no FINRA registered person may be an employee or receive compensation for outside business transactions unless he or she has provided prior written notice to their employer. Outside business transactions and selling away are prohibited activities because they serve to undercut the supervisory system implemented by FINRA-member firms and FINRA itself to protect the investing public.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages investing with Burke, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation.