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Regulation and Compliance > Federal Regulation > FINRA

FINRA Suspends Ex-Ameriprise Rep for Selling Shares in Friend’s Firm to Clients

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The Financial Industry Regulatory Authority suspended an ex-Ameriprise broker for nine months from association with any FINRA member in all capacities after he invested about $550,000 of his clients’ money in his friend’s energy firm without Ameriprise’s approval, violating FINRA and Ameriprise rules, according to the regulator.

Without admitting or denying the findings, Robert Nicholas Korzik signed a letter of acceptance, waiver and consent May 4 in which he agreed to FINRA’s suspension and an $8,500 fine. FINRA accepted the letter Tuesday.

In October 2011, Korzik became associated with Ameriprise as a general securities representative, according to FINRA. On Oct. 23, 2017, Ameriprise filed a Form U5, terminating his employment for “company policy violations related to private securities investments,” the AWC letter said, quoting Ameriprise.

“The advisor’s actions were in direct violation of our clear policies,” an Ameriprise spokeswoman told ThinkAdvisor on Wednesday, adding: “We investigated and terminated him, as appropriate.”

The event cited in the FINRA AWC letter was the “only undisclosed private-securities transaction Mr. Korzik has engaged in over the course of his career,” according to attorney Kevin Galbraith, who represented Korzik in the dispute. “He was not compensated, nor did he expect to be compensated,” Galbraith told ThinkAdvisor, adding: “The investors, when given the option of exiting the investment, affirmatively chose to remain invested.”

In September 2016, “JB,” Korzik’s friend and CEO of an energy company, identified only as “AEC” in the AWC letter, sent Korzik an email soliciting investments in AEC, according to FINRA. The email indicated that AEC was looking to raise $1.2 million in a private offering and attached a copy of AEC’s investor slide deck, private placement memorandum and business plan, the AWC letter said.

Subsequently, Korzik solicited several investors, including three of his high-net-worth clients at Ameriprise, by forwarding the September email and its attachments to them, FINRA said. Korzik’s participation in the AEC offering included, among other things, circulating information regarding AEC to investors, scheduling and participating in several meetings with his clients and JB, engaging in numerous email exchanges with JB that referenced amounts his clients would invest, and following up with his clients regarding their investments in AEC, FINRA claimed.

In December 2016, Korzik bought $50,000 worth of stock in AEC and his three clients then invested a total of $550,000 in return for shares in AEC, according to FINRA. Although shares of AEC were securities, Ameriprise did not offer or approve of their purchase or sale by its registered representatives, FINRA said, noting Korzik did not provide Ameriprise with prior written notice regarding his personal investment in AEC as required, nor did he inform Ameriprise regarding his solicitation and participation in his clients’ investments in AEC, which were also required.

“In fact, when the Firm discovered that Korzik was facilitating his clients’ purchases of securities in AEC, he denied that any clients had purchased AEC securities and attempted to buy out their shares,” FINRA said. Korzik, however, “received no compensation in connection with his clients’ purchase of these securities,” according to FINRA.

As a result of his conduct, Korzik violated FINRA Rules 2010 (governing standards of commercial honor and principles of trade) and 3280 (governing private securities transactions of an associated person), according to FINRA.

Korzik is no longer registered as a broker but is still registered as an RIA, according to his profile on FINRA’s BrokerCheck website.

— Check out FINRA Suspends Ex-Wells Fargo Rep Who Borrowed $16K From Client on ThinkAdvisor.


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