Robert Jeffrey Scherzer (Scherzer), a registered representative, settled a complaint with the Financial Industry Regulatory Authority (FINRA), which alleged he participated in outside business activities. Specifically, FINRA alleged Scherzer solicited five individuals to invest in a private placement without prior notice to his firm. Based upon these allegations, FINRA suspended and fined Scherzer.
Scherzer (FINRA CRD No. 1872092) entered the securities industry in 1988 as a general securities representative. From 1988 to 2014, Scherzer worked for Princor Financial Services Corporation. From 2014 until his voluntary resignation in November 2015, Scherzer worked for Raymond James Financial Services, Inc. Following his disciplinary action, Scherzer no longer woks in the financial industry.
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 Scherzer and alleged he solicited five individuals to invest in a private placement that was issued by a start-up collectibles company. In total, the five investors purchased $400,000 worth of the private placements, yet Scherzer did not earn compensation. According to FINRA, Scherzer did not disclose these transactions to Raymond James and did not receive prior approval.
Based upon the foregoing misconduct, FINRA alleges Scherzer violated NASD Rule 3040(b) and FINRA Rule 2010. NASD Rule 3040 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. Here, Scherzer did not disclose his participation in the collectibles private placement before having the investor purchase shares, 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.