The Financial Industry Regulatory Authority suspended an ex-Lincoln Financial broker after he engaged in unauthorized business activity involving an insurance company he owned and the Woodbridge Group of Companies Ponzi scheme despite being specifically prohibited by Lincoln from conducting that outside business activity, according to FINRA.
Without admitting or denying the regulator’s findings, Imran Nazir Razvi signed a FINRA letter of acceptance, waiver and consent Feb. 21 in which he agreed to a six-month suspension from associating with any FINRA member firm and a $5,000 fine. FINRA accepted the letter Thursday.
From April 2017 through March 2018, Razvi was registered as a general securities representative through his association with Lincoln, according to FINRA.
It was not immediately clear why he left Lincoln. However, there were two customer disputes involving him during his year at the firm, according to his profile on FINRA’s BrokerCheck website. In both cases, the clients claimed he made unsuitable investments and failed to disclose the risks of those non-registered investments. In one case, the customer requested $100,001 and settled for $67,486. In the other case, there was a settlement for $32,514.
Lincoln declined to comment Friday. There was no attorney listed on the FINRA AWC letter as Razvi’s representative.
In April 2014, Razvi started “Company A” to offer insurance products to customers; in addition to owning that firm, he served as its president, according to FINRA. In that capacity, Razvi supervised several insurance agents working for Company A.
As Lincoln’s procedures required, Razvi sought approval from it to participate in an outside business activity involving Company A, FINRA said. In particular, Razvi sought approval to use Company A to refer investors to the Woodbridge Group.
On Feb. 7, 2017, Lincoln denied Razvi’s request and notified him that he could not accept compensation or consideration for referrals to Woodbridge, according to the FINRA AWC letter. Despite that denial, Company A’s agents continued to refer investors to Woodbridge and, in exchange for these referrals, the agents received commissions, FINRA said.
The commissions that Company A’s agents earned were paid to Company A and Razvi, via his ownership of Company A, received part of those commissions, according to the FINRA letter.
As a result of his behavior, Razvi violated FINRA Rules 3270 (governing outside business activities of registered persons) and 2010 (governing standards of commercial honor and principles of trade), according to FINRA.
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 $1.22 billion fraud scheme that hurt more than 8,400 unsuspecting investors across the U.S. through unregistered securities offerings.
The Woodbridge Ponzi scheme collapsed Dec. 4, 2017, when Shapiro caused Woodbridge and its many related companies to file for bankruptcy, according to the SEC.
Since then, there have been many actions taken by FINRA and the SEC to sanction agents and brokers tied to the Woodbridge scam.
For example, FINRA recently barred a broker from association with any FINRA member in any capacity after he sold more than $3 million in Woodbridge 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. In that case, Jeffrey Scott Nimmow signed a letter of acceptance, waiver and consent Dec. 27 in which he agreed to that sanction.