FINRA requires employees of FINRA-member firms to disclose all outside business-related activities to the member firm regardless of whether the employee earns income from the venture or not. FINRA’s Department of Enforcement investigated Duch and found he participated in several private securities transactions. Specifically, FINRA alleged Duch introduced at least three Cambridge customers and two non-Cambridge customers to a distributor for two unregistered oil and gas offerings named Running Springs Oil and Gas, L.P. and Obele Energy, L.P.
Further, FINRA alleged Duch also facilitated the investment of two Cambridge Investment customers in unregistered promissory notes offered by Montana Victory Insurance Services, LLC. According to FINRA, Duch was not compensated for facilitating any of the aforementioned transactions, but yet, still ran afoul of FINRA rules because he did not disclose his customers’ investment in the outside companies to Cambridge Investment.
Based upon the foregoing misconduct, FINRA alleges Duch violated NASD Conduct Rule 3040 and FINRA Rule 2010. 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 with Duch through Cambridge Investment, 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.