William Wesley Marshall of Plano, Texas, a stockbroker for Ameriprise Financial Services Inc., was fined $10,000.00 and suspended for fifteen months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in unauthorized private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2012033291204 (Feb. 9, 2016).
According to the AWC, from January 6, 2011 through May 2, 2012, William Marshall had engaged in the participation of $1,720,000.00 of preferred stock that was privately issued. Marshall reportedly affected these transactions with firm customers, as well as several of the firm’s staff, despite not providing Ameriprise with written notification prior to doing so. The AWC indicated that the issuer, BioChemics, Inc., provided Marshall with common stock purchase warrants in exchange for his participation.
The AWC stated that Marshall was also involved with BioChemics as a member of the Company’s Scientific Advisory Board. Marshall reportedly held a medical degree and worked with the company to assist with its initiatives involving a transdermal drug delivery system. Marshall apparently received common stock purchase warrants as a result of this conduct. FINRA found that Marshall did not provide written notice to his firm regarding this outside business activity.
Additionally, with regard to BioChemics, Marshall had reportedly used a personal e-mail that had not been approved by his firm in pursuing his efforts to correspond with the firm’s customers about their aforementioned investment in BioChemics. This apparently prevented the firm from properly supervising the retention and review of such correspondence.
The firm’s policies, according to the AWC, had prohibited stockbrokers such as Marshall from engaging in any outside business activities prior to providing written notice to the firm. The firm additionally had prohibited, via its policies and procedures, stockbrokers from engaging in transactions of privately issued securities that the firm had not offered. Ameriprise’s policies, according to the AWC, further prohibited any personal investments in such privately issued securities absent proper notification being provided to the firm.
The AWC further indicated that investors were provided with BioChemics sales data via Marshalls distributions where such correspondence had not disclosed Marshall’s personal and business interests in the firm. FINRA found such sales literature to have contained statements that were exaggerated and unwarranted. The sales literature reportedly failed to disclose risks associated with the investment.
FINRA found that Marshall had violated FINRA Rules 2010 and 3270, as well as NASD Rule 3040(b) and NASD Rule 2210(d)(1)(A)-(B), as a result of his participation in outside business activities, private securities transactions, and his part in the distribution of sales material that FINRA deemed improper.
Public disclosure records revealed that on December 12, 2012, BioChemics was named in a Securities Exchange Commission civil enforcement action that resulted in the United States District Court for the District of Massachusetts permanently enjoining the company from committing violations of federal securities law antifraud provisions. BioChemics was ordered to disgorge $17,000,000.00 in gains and pay a civil penalty of $750,000.00.
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