FINRA Sanctions Financial Advisors Over Allegedly Selling Away $8M in Promissory Notes

FINRA has suspended former Columbia Capital Securities brokers Josiah Jennings and William Pugh for 10 months after they allegedly sold $8 million in unapproved private equity promissory notes involving undisclosed conflicts of interest. The law firm Shepherd Smith Edwards and Kantas is offering free case consultations to help affected investors explore legal claims against the brokerage firm for failed supervision and selling away.

The Financial Industry Regulatory Authority (FINRA) has suspended two former Columbia Capital Securities financial advisors for 10 months for allegedly improperly selling $8 million in promissory notes from a private equity fund in which they purportedly had conflicts of interest. Josiah D. Jennings and William N. Pugh, who were allowed to resign from the broker-dealer, remain registered investment advisers with Vela Consulting.

Nearly 18 accredited investors, many of them customers of Columbia Capital Securities, were sold promissory notes in a private equity fund that Jennings was co-founder of and in which Pugh held a 3% ownership interest. While the brokerage firm had approved Jennings’ involvement in the fund as an outside business activity—neither of the men were paid commissions from the sales—FINRA found that the financial advisors engaged in private securities transactions without firm authorization. This is known as selling away.

Shepherd Smith Edwards and Kantas (investorlawyers.com) is investigating investor losses related to these broker misconduct allegations against Josiah Jennings and William Pugh. We are offering a free initial case consultation to those wishing to explore their legal options.

What Is Selling Away And How Is It Harmful To Investors?

This is the term given to when a broker sells an investment to a customer that the brokerage firm did not offer or approve.

• Selling away can expose investors to fraud or allow brokers to conceal from the firm the transactions and any conflicts of interest.
• An investor may find it harder to track money lost in selling away because trades from selling away usually don’t show up on account statements.
• Risk monitoring, compliance review, and proper due diligence are often bypassed when selling away happens.

It should be noted that selling away is allowed as long as the financial advisor notifies the broker-dealer and its compliance department about the transaction before it happens. The firm must approve it.

What Are Some Possible Signs of Selling Away?

• You are offered investments that your broker-dealer does not sell.
• The offering documents that are sent to you don’t include compliance disclosures.
• Your financial advisor asks you to send the money for the investment to an unknown third party.
• You are encouraged to get in on a private deal.

Can I Sue My Brokerage Firm Even If They Didn’t Know My Financial Advisor Was Selling Away?

Broker-dealers have a duty to properly supervise their registered representatives and prevent selling away from happening. Whether or not they were aware anything improper was going on, you still may be able to hold them liable for your losses and the wrongful actions of their financial advisors.

Representing Investors With Selling Away Claims Against Their Brokerage Firm

Shepherd Smith Edwards and Kantas represents investors who have suffered losses because of selling away by their financial advisor. This is not the kind of legal claim you want to make without knowledgeable investment loss recovery lawyers representing you.

Call (800) 259-9010 or contact us online today.