FINRA’s Department of Enforcement investigated Schafer and alleged he purchased an ownership interest in a Florida company for the purpose of investing in real estate development. FINRA also alleged Schafer held a 5.85% ownership interest in the company as indicated in the company’s operating agreement. According to FINRA, Schafer never disclosed these outside business activities to Park Avenue.
Based upon the foregoing misconduct, FINRA alleges Schafer violated NASD Conduct Rules 2110 and 3040. Specifically, 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 lost money investing with Schafer while Park Avenue employed him as a general securities representative, 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.