The Financial Industry Regulatory Authority says it has barred a former Commonwealth Financial Network broker who was terminated after he was accused of fraudulently using funds from clients’ accounts.
Gerald Allan Eaton submitted a letter of acceptance, waiver and consent to FINRA Nov. 12 in which he agreed to be barred from association with any FINRA member firm in any capacity. He agreed to the letter without admitting or denying the findings. The letter was accepted by FINRA on Wednesday.
Eaton first registered with a FINRA member firm in 1992, when he joined John Hancock, according to FINRA’s BrokerCheck website. He was with two divisions of that firm until 1995, when he left to join Commonwealth, the site shows.
From March 1995 through October 2019, Eaton was registered with Commonwealth as an investment company products/variable contracts representative, according to FINRA. Eaton remained registered with Commonwealth until he was terminated by Form U5 filed Nov. 1.
In that form, Commonwealth stated the reason for the termination was that Eaton “fraudulently facilitated distributions from the accounts of clients without their knowledge or consent or for their benefit.”
Commonwealth “recently discovered a matter involving serious misconduct by” Eaton, Jim Adelman, senior vice president and general counsel at Commonwealth, told ThinkAdvisor on Thursday. Commonwealth terminated Eaton’s affiliation with Commonwealth Oct. 28 and “informed law enforcement of his activities,” Adelman said, adding: “We are cooperating with the ongoing investigation and, as such, cannot comment further.”
FINRA started investigating Eaton after learning of his allegedly improper conduct, according to FINRA. Prior to the incident, he had no other disclosures on his record, BrokerCheck shows.
FINRA Rule 8210(a)(1) states it has the right to “require a member, person associated with a member, or any other person subject to FINRA’s jurisdiction to provide information orally, in writing, or electronically … with respect to any matter involved in the investigation, complaint, examination or proceeding.” FINRA Rule 8210(c), meanwhile, states that “[n]o member or person shall fail to provide information or testimony or to permit inspection and copying of books, records, or accounts pursuant to this Rule.” FINRA Rule 2010 requires registered members to observe high standards of commercial honor and just and equitable principles of trade.
As part of its investigation of Eaton’s actions, on Nov. 8 FINRA staff sent a written request to him asking Eaton to produce information and documents pursuant to FINRA Rule 8210. However, on the same day, Eaton said he would not produce the information or documents as requested pursuant to FINRA Rule 8210, according to FINRA. Therefore, Eaton violated FINRA Rules 8210 and 2010, it said.
Eaton and his attorney, Steven Fuller of Markun Zusman Freniere Compton LLP in Wellesley, Massachusetts, didn’t immediately respond to a request for comment.
— Check out Ex-Broker Sentenced to 3-6 Years in Prison for Bogus Forex Trading Scheme on ThinkAdvisor.