FINRA Suspends Advisor Who Hid $50K Private Placement
The broker also has been slapped with $5,000 fine; he admitted asking the client to reach him via a personal email address after the sale.
The Financial Industry Regulatory Authority has suspended an advisor for 45 days after he concealed a $50,000 private placement offering from the firm he was registered with at the time.
Advisor Brian J. Lockett, CFP, signed a letter of acceptance, waiver and consent on Tuesday in which agreed to the suspension and to pay a $5,000 fine over the incident.
The suspension is set to start Dec. 2, 2019, and end Jan. 15, 2020, according to FINRA BrokerCheck website, which also shows he was involved in nine customer disputes between December 2012 and September 2016.
Lockett participated in that private securities transaction without providing prior written notice to Geneos Wealth Management, violating NASD Rule 3040(b) and FINRA Rule 2010.
Plus, in March 2013, “Lockett attempted to conceal his role in the transaction by suggesting to the customer that the customer communicate about the transaction with Lockett in the future via Lockett’s personal email address,” FINRA said.
The advisor agreed to the letter without admitting or denying the findings and received no compensation for his role in the private placement.
Lockett became registered as a representative with Geneos Wealth in 2004 and remained there until his “voluntary termination” in November 2013, when he became associated with Independent Financial Group, according to BrokerCheck.
He currently is a vice president with Comprehensive Wealth Management in Lynnwood, Washington, according to its website.
More Details
On July 28, 2016, Geneos filed a Form U5 Amendment reporting a verbal complaint by and settlement with a client who claimed, in part, that Lockett had recommended an “unapproved private investment” in July 2012, according to FINRA.
FINRA started an investigation into the matter after receiving the Form U5 Amendment and found that one of Lockett’s clients invested $50,000 in the private placement.
Lockett introduced the transaction to the client, summarized the reasons he liked the investment, met with the client to review and sign the paperwork, “causing the paperwork to be submitted,” FINRA said.
After the client complained to Geneos, the firm entered into a settlement to resolve the complaint. Independent Financial Group didn’t comment and instead referred ThinkAdvisor to Lockett’s counsel. Geneos, Lockett’s attorney and Comprehensive Wealth Management didn’t immediately respond to requests for comment.
Among the nine customer disputes that Lockett was involved in, the largest settlement was for $450,000 in early 2015. The client had sought $560,000, claiming Lockett negligently managed variable annuity sub-accounts from 2011 to 2014.
Lockett “may seek expungement relief” in the case and “the parties denied all allegations of wrongdoing and agreed the settlement is not an admission of any liability or wrongdoing and was entered into solely in order to avoid risks and expense of further litigation,” according to a comment posted on FINRA’s website.
In one dispute, a 2016 complaint wound up being withdrawn.
The other disputes, though, resulted in settlements ranging from $7,750 to $350,000. The latter amount was tied to a client’s allegation that Lockett “participated in the sale of unapproved and unsuitable investments in oil and gas as well as other causes of action” from 2011 to July 2012, according to BrokerCheck.