The Financial Industry Regulatory Authority barred a broker from association with any FINRA member in any capacity after he sold more than $3 million in the Woodbridge Group of Companies’ promissory notes to 18 investors without first disclosing and seeking approval for the transactions from Forest Securities, the firm he was registered with at the time.
Advisor Jeffrey Scott Nimmow signed a letter of acceptance, waiver and consent Dec. 27 in which he agreed to the sanction. FINRA accepted the letter Monday.
The Securities and Exchange Commission found Woodbridge operated as a massive Ponzi scheme from July 2012 through December 2017. In October, ex-Woodbridge CEO Robert Shapiro was sentenced to 25 years in prison by a federal judge in Miami for leading the $1.2 billion fraud scheme that hurt some 8,400 investors.
Between February 2016 and mid-November 2017, Nimmow “sold at least” $3.365 million in Woodbridge’s First Position Commercial Mortgages promissory notes to his clients, receiving about $177,937 in commissions from the transactions, according to the FINRA letter. Two of the investors were Forest Securities investors at the time they made the investments, FINRA said.
Nimmow neither disclosed or received approval for the transactions from Forest, violating FINRA Rules 3280 (governing private securities transactions of an associated person) and 2010 (governing standards of commercial honor and principles of trade), according to FINRA.
Compounding his violations, Nimmow was “only registered to sell certain categories of securities and did not possess the proper FINRA registration to sell” the Woodbridge promissory notes, FINRA noted.
Nimmow was terminated by Forest March 6, 2018, due to “inaccurate judgement by the representative involving Woodbridge promissory notes and mortgages contained in Woodbridge funds,” according to a disclosure statement on his profile at FINRA’s BrokerCheck website.
As of Wednesday, there were still two pending customer disputes related to the Woodbridge notes transactions listed on his BrokerCheck profile, with clients in the disputes requesting damages of $150,000 and $450,000.
Forest Securities CEO Michael Dunne and Jeffrey J. Liotta, a partner at the law firm Husch Blackwell in Milwaukee, who represented Nimmow in the FINRA dispute, did not immediately respond to requests for comment.
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