FINRA Suspends Ex-Wells Fargo Rep Over Crypto Concealment

From April 2015 until January 2019, Davis engaged in undisclosed outside business activities away from Wells Fargo, according to FINRA. From at least the start of that period, he “established and/or participated in the operations of five business entities created to invest in cryptocurrencies, and one entity to trade commodity futures, without providing prompt notice to” Wells Fargo, FINRA alleged.

By engaging in business activities without providing written notice to his employer firm, Davis violated FINRA Rules 3270 (governing outside business activities) and 2010 (governing standards of commercial honor and principles of trade), according to the regulator.

In December 2017, Davis also violated FINRA Rules 3280 (governing private securities transactions) and 2010 by taking part in six private securities transactions without providing prior written notice to Wells Fargo, according to FINRA. “Davis marketed investment pools to others through two of the companies trading cryptocurrencies,” the regulator alleged. The two companies were identified only as “LLC 1″ and “L.P. 1” in the AWC letter.

During that same month, Davis participated in raising capital from six investors, soliciting investments of about $200,000 in exchange for either membership interests in LLC 1 or interests in L.P. 1, according to FINRA. Davis solicited those investments by “creating and distributing marketing materials and presentations related to these entities and their investment plans to the prospective investors, and helped draft emails used to solicit investor funds,” the regulator alleged, adding: “Subsequently, approximately 96% of the investors’ funds were returned to them after these entities failed to be profitable.”

Throughout the relevant period, Davis also “intentionally provided false information to Wells Fargo to conceal his outside business activities and private securities transactions, in violation of FINRA Rule 2010,” FINRA said.