FINRA’s Department of Enforcement investigated Parthemer and alleged he engaged in several outside business activities with Morgan Stanley and Wells Fargo clients – most of whom were professional athletes. First, from June 2009 through March 2013, FINRA alleged Parthemer participated in outside business activities in connection with a Miami beach nightclub (Club Play), club promotion and marketing a brand of tequila. Second, from November 2011 through January 2012, FINRA alleged Parthemer loaned approximately $399,500 to three professional athletes who were owners of nightclub as well as customers of Parthemer at Wells Fargo.
Finally, FINRA alleged Parthemer recommended private securities transaction in a startup internet branding company (GVC) to at least eight of his NFL and NBA clients in the amount of approximately $3.0 million. According to FINRA, Parthemer facilitated the transactions by hosting a presentation for investors conducted by his business associate at Parthemer’s home, sending PowerPoint presentations and other information concerning GVC to potential investors, and forwarding and retrieving required documentation to and from investors.
During the relevant time period, Morgan Stanley and Wells Fargo’s policies and procedures prohibited firm employees from engaging in outside business activities without prior written notice and approval. Parthemer never disclosed these outside investments to Morgan Stanley or Wells Fargo as required by the firms’ policies and procedures according to FINRA.
Based upon the foregoing misconduct, FINRA alleges Parthemer violated NASD Conduct Rules 3030 and 3040, as well as FINRA Rules 2010, 3240 and 3270. Specifically, FINRA Rule 3240 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. A violation of FINRA Rule 3240 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 Parthemer while Morgan Stanley or Wells Fargo 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.