David Apted (Apted), a registered representative, settled a complaint with the Financial Industry Regulatory Authority (FINRA), which alleged he participated in outside business activities. Specifically, FINRA alleged Apted solicited two customers to investment in a venture capital fund without notice to his firm. Based upon these allegations, FINRA suspended and fined Apted.
Apted (FINRA CRD No. 1255773) has been registered as a general securities representative since 1985. From 2013 to 2016, Apted worked for Smith, Moore & Co. According to Apted’s FINRA BrokerCheck report, he has five negative disclosures, including three financial-related disclosures.
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 Apted and alleged he solicited two customers to invest $300,000 collectively in a venture capital fund. According to FINRA, Apted did not disclose these transactions to Smith, Moore and did not receive prior approval. Apted also was accused of sharing nonpublic information concerning 39 customers and sent approximately 150 tweets about securities without his firm’s approval.
Based upon the foregoing misconduct, FINRA alleges Apted 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, Apted did not disclose his participation in recommending the fund to the two customers, 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.