FINRA’s Department of Enforcement investigated Epps and alleged he participated in an undisclosed private securities transaction by investing his personal funds and also solicited potential investors in a privately held start-up company. According to FINRA, Epps invested $190,000 of his personal funds in NHJ, a privately held entity, in August 2010. FINRA also alleged Epps referred four NY Life customers to invest a total of $800,000 in the same privately held venture. Specifically, FINRA alleged Epps facilitated the customers’ investments in the private company by providing information and responding to questions regarding the company to the customers via email and telephone conversations.
During the relevant time period, NY Life’s policies and procedures prohibited firm employees from engaging in outside business activities without prior written notice and approval. Epps never disclosed these outside investments to NY Life as required by the firms’ policies and procedures according to FINRA.
Based upon the foregoing misconduct, FINRA alleges Epps violated NASD Conduct Rule 3040 as well as FINRA Rules 2010. Specifically, NASD Rule 3040 prohibits associated persons from participating in any manner in a private securities transaction outside their regular course of employment with a member firm, without providing prior written notice and receiving prior written approval from the member firm. A violation of NASD Rule 3040 also constitutes a violation of FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principals of trade.
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 Epps while NY Life 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.