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 Garnett and found he participated in several private securities transactions. Specifically, FINRA alleged Garnett participated in an undisclosed private securities transaction “away” from Edward Jones by organizing a private placement for SFG, an entity that was formed to acquire an interest in SFI, a helicopter medical evacuation business.
Further, FINRA alleged Garnett was intimately involved in the operational and sales aspects of the aforementioned businesses. Garnett allegedly sought investors, including Edward Jones customers; coordinated the investor group’s activities; negotiated with SFI; and prepared agendas for investor meetings. Ultimately, SFG issued $2.5 million in securities to eight investors, including Garnett.
Based upon the foregoing misconduct, FINRA alleges Garnett violated NASD Conduct Rules 3040 as well as FINRA Rules 2010 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 Garnett while he worked for Edward Jones, 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.