The Financial Industry Regulatory Authority sanctioned a former Morgan Stanley representative for failing to inform the firm about the “full nature of his participation” in an outside business that engaged in gunsmith activities, according to FINRA.
Without admitting or denying the findings, Benjamin Kaz Fujihara, signed a FINRA letter of acceptance, waiver and consent Feb. 29 in which he agreed to a 30 business-day suspension from associating with any FINRA member firm and pay a $5,000 fine. FINRA accepted the letter Friday.
Morgan Stanley declined to comment Monday. Fujihara became registered through the firm as a general securities representative in June 2009, according to FINRA. In November 2016, he requested in writing that Morgan Stanley approve his participation in an outside business that engaged in gunsmith activities, including restoring and performing woodworking services on firearms, FINRA said.
In January 2017, Morgan Stanley approved Fujihara’s participation in the proposed outside business, provided he limit his role to gunsmith activities and not use his federal firearms license as a dealer of firearms. Morgan Stanley also advised Fujihara that he would have to get written approval before making any changes to his outside business activity or looking to take part in any additional outside business activities, according to the FINRA AWC letter.
However, between February 2017 and July 2018, Fujihara bought and resold a small number of firearms via his outside business without performing any woodworking or other gunsmith services on the firearms before selling them, FINRA said. In so doing, Fujihara engaged in outside business activities without providing full and accurate prior written notice to Morgan Stanley of those activities, according to the FINRA AWC letter.
In a broker comment included in his profile on FINRA’s BrokerCheck website, Fujihara said he formed the Texas LLC Patriot Weapons Systems, which went on to sell guns to two of his friends at Morgan Stanley. “I did not solicit these two sales,” he said, adding those employees at Morgan Stanley “approached me and asked if I could purchase one rifle for each of them,” and the sales were both “at cost.”
On Aug. 8, 2018, Morgan Stanley filed a Form U5 termination notice, disclosing that Fujihara resigned “following concerns about … his adherence to the terms of an approval for an outside business activity that was not investment-related,” according to the FINRA AWC letter.
Separately, the FINRA Department of Enforcement filed a complaint against Raymond A. Thomas, an ex-Network 1 Financial broker, on Friday, claiming he engaged in outside business activities via Waverly Capital Group, a company he formed, without providing prior notice to Network 1.
Network 1 and Waverly Capital did not immediately respond to requests for comment about the complaint. Network 1 terminated Thomas in March 2018 because he “failed to provide records that were requested” by the firm, according to his profile on BrokerCheck, which also showed he is not currently registered as a broker.
Thomas then “repeatedly provided false or misleading information” to FINRA staff while investigating him “in an effort to conceal that he was engaged in outside business activities,” according to its complaint. The ex-rep violated FINRA Rules 3270, 2010 and 8210 (governing the provision of information and testimony and inspection and copying of books), the complaint said.
— Related on ThinkAdvisor: