A FINRA hearing panel barred a registered representative, Jim Seol, for participating in private securities transactions, engaging in undisclosed outside business activities, and for making misrepresentations to his employer in compliance questionnaires.
The hearing panel found that Seol sold $100 million in EB-5 investments promoted through his private business, Western Regional Center Inc. (WRCI), yet failed to disclose this activity to his employing firm. Seol worked as an Ameriprise financial advisor in an Irvine, California branch office.
FINRA rules and Ameriprise’s policy required Seol to disclose and obtain prior approval for all outside business activities. Shortly after Seol’s belated revelation of his WRCI activities, Ameriprise terminated him on May 28, 2014, for violating the firm’s policy regarding disclosure of outside business activities.
According to the hearing panel decision, Seol formed WRCI in September 2011 to market U.S. investments to overseas investors through the U.S. government’s EB-5 program. The EB-5 program permits foreign investors to obtain a U.S. visa in exchange for investing in projects that create U.S. jobs.
Seol identified a potential investment opportunity for his newly formed company involving a solar energy power plant in Riverside, California. After negotiating an agreement with the power plant, Seol traveled to South Korea and China to market the investments to foreign migration companies and attorneys.
By the end of 2013, the offering was fully subscribed with all partnership units sold to 200 different investors contributing $500,000 each, totaling $100 million.
WRCI earned a management fee from the offering that generated $736,000 per year. The hearing panel found that from 2012 to 2014, Seol intentionally concealed his WRCI activities from Ameriprise in multiple instances by repeatedly lying to his supervisor and the compliance examiner that he had "no outside business activities, no outside employment, no outside board memberships, and no ownership interest in any legal entities.”
In addition, according to FINRA, Seol claimed at the hearing that he did not believe the firm's policy against outside securities transactions applied to his solicitations through WRCI because he did not understand the limited partnership interests sold to investors to be securities. The panel concluded that the limited partnership interests were securities.
The hearing panel said that Seol's claim that he believed otherwise was "incredible" given the fact Seol had discussions with a business partner acknowledging that the interests were securities. In assessing sanctions, the panel found Seol's conduct "egregious."
Unless the hearing panel's decision is appealed to FINRA's National Adjudicatory Council (NAC), or is called for review by the NAC, the hearing panel’s decision becomes final after 45 days.
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