In October 2017, Michael A. Crowe (Crowe), a registered representative, settled a complaint with the Financial Industry Regulatory Authority (FINRA), which alleged he participated in outside business activities. Specifically, FINRA alleged Crowe solicited a married couple to invest in a real estate investment company without notice to his firm. Based upon these allegations, FINRA suspended and fined Crowe.
Crowe (FINRA CRD No. 1057029) entered the securities industry in 1983 as a general securities representative. From 1989 to 2011, and then from 2012 to 2016, Crowe worked for Securities America, Inc. (“SAI”). According to FINRA’s BrokerCheck Report, Crowe has 9 negative disclosures, including various customer complaints. Crowe is no longer associated with any FINRA-member; however, he remains subject to FINRA’s jurisdiction.
FINRA requires employees of FINRA-member firms to disclose all outside business-related activities, private transactions and all investments recommended to any customers to the member firm. The unlawful business practice of recommending investments outside of a financial advisor’s firm is often referred to as “selling away.” 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.
FINRA’s Department of Enforcement investigated Crowe and alleged he solicited a married couple to invest $50,000 in a real estate investment company. The aforementioned customers received a $1,250 return on their investments, but then did not receive any additional payments. According to FINRA, Crowe did not disclose these transactions to SAI and did not receive prior approval.
Based upon the foregoing misconduct, FINRA alleges Crowe violated FINRA Rules 2010 and 3280. For example, FINRA 3280 prohibits registered representatives from “participating in any manner in a private securities transaction” unless the registered representative provides written notice to the member, and where he is to receive selling compensation, the member has approved his participation in the proposed transaction. Here, Crowe did not disclose his participation in recommending the real estate investment to the couple, and therefore, violated FINRA rules.
Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.