Kevin Edward Looser (Looser), a registered representative, settled a complaint with the Financial Industry Regulatory Authority (FINRA), which alleged he participated in outside business activities. Specifically, FINRA alleged Looser participated in fourteen private securities transactions without prior notice to his firm. Based upon these allegations, FINRA suspended Looser for four months and fined him $10,000.
Looser (FINRA CRD No. 1973866) entered the securities industry in 1991 as a general securities representative. From 2005 to 2017, Looser worked for Sigma Financial Corporation (“Sigma”). In September 2017, Sigma terminated Looser for failing to notify the firm of outside business activities.
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 Looser and alleged he was involved in raising approximately $430,000 for a company from the sale of membership units to 14 investors. Looser introduced and discussed the company with 13 Sigma customers and one non-firm customer. FINRA alleges Looser referred those customers to his co-owner in the company to invest, but did not receive compensation from the referrals. According to FINRA, Looser did not disclose these transactions to Sigma and did not receive prior approval.
Based upon the foregoing misconduct, FINRA alleges Looser 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, Looser did not disclose his participation in the outside business activities before having the investors 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.