FINRA requires employees of FINRA-member firms to disclose all outside business-related activities and all investments recommended to any customers to the member firm. FINRA’s Department of Enforcement investigated Pittman and found he referred a customer to invest $100,000 in a petroleum company promissory note. According to FINRA, Pittman received $4,000 in compensation from the referral.
FINRA alleged Pittman failed to provide prior written notice to Sabadell Securities of his participation prior to participating in the aforementioned private securities transaction. In addition, Pittman failed to obtain Sabadell Securities approval of his referral of the customer to purchase a petroleum company promissory note.
Based upon the foregoing misconduct, FINRA alleges Pittman violated NASD Conduct Rule 3040 and FINRA Rule 2010. 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 Pittman while he worked for Sabadell Securities, 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.