The Financial Industry Regulatory Authority barred an ex-Independent Financial Group broker from association with any FINRA member in any capacity after he transferred $11,100 of his clients’ funds to his personal bank account and used the money for personal expenditures, according to FINRA.
Martin David Batstone submitted an offer of settlement to FINRA’s Department of Enforcement Feb. 13 in which he, without admitting or denying the regulator’s allegations, agreed to be barred, FINRA said. FINRA issued an order Tuesday accepting Batstone’s offer.
Batstone was registered with IFG as a general securities representative from January 2009 to April 2017, then left and joined Crown Capital Securities in 2017, according to FINRA’s BrokerCheck website. No reason was cited for his departure from IFG and the firm did not immediately respond to a request for comment Thursday.
Between November 2015 and August 2016, while associated with IFG, Batstone solicited two of the firm’s customers to invest a total of $75,000 in a small limited liability company purporting to provide brand management and product placement services for athletes and entertainers, according to the FINRA order accepting offer of settlement.
While soliciting those investments, Batstone told the customers their funds would be used by the firm for general operating expenses, including marketing and distribution of an energy drink, FINRA said. However, “contrary to these representations,” between November 2015 and January 2017, Batstone transferred $11,100 of the customers’ funds to his personal bank accounts and used the funds for his personal expenditures, the regulator said.
In the process, Batstone “willfully violated” Section 10(b) of the Securities Exchange Act, Rule 10b-5(a)—(c), as well as FINRA Rules 2020 (governing conflicts of interest) and 2010 (governing standards of commercial honor and principles of trade), according to FINRA.
By using client funds for his personal expenditures instead of for investment purposes, as intended by the customers, Batstone converted the customers’ funds, FINRA noted. As a result, Batstone violated FINRA Rules 2150 (governing improper use of customers’ securities or funds) and 2010, FINRA said.
Because Batstone never gave IFG written notice, or otherwise informed the firm, of his participation in soliciting investments in the company, which constituted private securities transactions, he also violated FINRA Rules 3280 (governing private securities transactions) and 2010, FINRA said.
On Oct. 1, 2019, Batstone was named a respondent in a FINRA complaint over his actions.