Misconduct of Registered Representative Venugopal R. Reddy

Venugopal R. Reddy allegedly violated FINRA Rules 3280 and 2010 by participating in private securities transactions without providing prior written notice to his firm, World Choice Securities, Inc. (WCS). FINRA determined that between November 2021 and October 2022, Reddy helped solicit investments and executed subscription agreements on behalf of an investment fund and affiliated entities. As a result of this misconduct, FINRA imposed a six-month suspension from associating with any FINRA member and a $5,000 fine.

Reddy first became registered with FINRA in May 2019 and was most recently registered as a General Securities Representative through WCS from February 2020 until his voluntary termination in September 2023. Although no longer registered, he remains under FINRA’s jurisdiction. During his tenure, he disclosed his ownership interest in an investment fund but did not properly disclose his direct role in private securities transactions to WCS in advance, which triggered the regulatory action.

The key rule at issue, FINRA Rule 3280, prohibits associated persons from engaging in private securities transactions outside the scope of their employment without first providing detailed written notice to their member firm. For example, if a broker wishes to help raise money for a startup outside of their firm, they must first notify their firm in writing and receive written approval. Similarly, if a representative expects to receive compensation from an investment opportunity not offered through the firm, they must disclose and seek approval in advance. A violation of Rule 3280 is also deemed a violation of FINRA Rule 2010, which requires high standards of commercial honor and just and equitable principles of trade.

In this case, FINRA found that Reddy helped raise approximately $5 million in capital from nine customers for the investment fund without timely disclosing his participation to WCS or obtaining written approval. Although Reddy disclosed his role as co-owner and provided draft offering materials, he failed to properly disclose his actual participation in soliciting investors. By neglecting to follow the procedures outlined in Rule 3280, FINRA concluded that Reddy violated both Rule 3280 and Rule 2010, resulting in the sanctions.

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.

The content on this site reflects personal opinions and does not constitute statements of fact. No findings have been made against the firms or individuals mentioned. This blog is intended solely for educational purposes, drawing on publicly available information to provide general insights and a basic understanding of the law. It is not a substitute for legal advice.