Two Columbia Brokers Suspended Over $8 Million Undisclosed Note Offering

William Nicholas Pugh and Josiah D. Jennings, both formerly with Columbia Capital Securities, Inc., each agreed to a 10-month suspension and a $10,000 fine under separate Letters of Acceptance, Waiver, and Consent (AWCs) with FINRA. According to FINRA, between April and August 2024, Pugh and Jennings participated in private securities transactions without giving prior written notice to their firm, in violation of FINRA Rules 3280 and 2010. Both brokers consented to FINRA's findings without admitting or denying them.

Pugh first registered with FINRA in 2004, and Jennings first registered in 2012. Pugh joined Columbia Capital Securities in August 2021 and Jennings joined in October 2021, both as General Securities Representatives. On September 15, 2024, Columbia filed a Form U5 for each broker stating that it permitted him to resign while under investigation for "participating in selling securities [away from the firm] without notice to or approval from [the] firm." Neither broker was registered with a FINRA member firm at the time of the AWCs.

FINRA Rule 3280 requires a broker to give the firm written notice before participating in any private securities transaction, meaning a securities sale outside the regular scope of the broker's job. The notice must describe the transaction, the broker's role, and any compensation. This rule against "selling away" allows the firm to supervise the activity or refuse to allow it. For example, a broker would violate this rule by soliciting clients to invest in a friend's real estate fund without telling the firm. A broker would also violate it by helping a private company raise money from clients through investor meetings, even if the broker receives no commission.

According to FINRA, Jennings co-founded a private equity fund, held an ownership interest in its general partner, and served as the general partner's chief executive officer. Columbia approved this role as an outside business activity on the condition that Jennings follow Rule 3280 if he participated in securities transactions for the fund. Pugh was a limited partner in the fund, held a three percent ownership interest in the general partner, and worked as an independent contractor for it. Between April and August 2024, the fund sold promissory notes. Jennings allegedly consulted with counsel, helped draft the offering documents, selected the investors to solicit, attended initial meetings, and signed the notes for the fund. Pugh allegedly helped identify and solicit investors, attended meetings, handled follow-up communications, and helped investors buy the notes and transfer funds. The offering raised at least $8,000,000 from 18 accredited investors, nearly all of whom were Columbia customers. Neither broker gave Columbia prior notice, and FINRA noted that neither earned commissions on the offering.

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.