Justin K. Wine, of Cherry Hill, New Jersey, a stockbroker with LPL Financial LLC, was fined $12,500.00 and suspended for two 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. 2012033934201(May 10, 2016).
According to the AWC, in February 2012, Wine corresponded with an individual, AS, who was the founder of a micro-loan company, DS, regarding a business opportunity. Apparently, Wine obtained and analyzed a business plan by DS. Wine reportedly reviewed investment documentation, a profit sharing arrangement, and promissory note drafts.
Subsequently, from April 2012 through June 2012, Wine had discussed the investment opportunity with three of LPL’s clients, and made recommendations to invest accordingly. Apparently, Wine transmitted DS’s business documentation to the customers, as well as the promissory note for customers’ to execute.
The AWC stated that Wine was under an obligation, pursuant to LPL’s supervisory procedures, to inform his firm regarding potential private securities transactions. The notification called for the transaction to be detailed to the firm, including Wine’s participation in the transaction and the compensation he would be deriving. The AWC further noted that the firm had to approve, in writing, any participation by Wine prior to his engagement in the transaction.
Wine reportedly failed to notify his firm regarding the transaction. According to the AWC, LPL was not informed as to Wine’s communications with DS or recommendations to LPL’s customers. Apparently, at least one of the clients made a $25,000.00 investment in DS. The AWC stated that Wine did not disclose the client’s investment. FINRA found that Wine’s aforementioned conduct was violative of FINRA Rules 2010 and 3040.
The AWC further stated that from October 2011 through November 2012, Wine became involved in outside business activities with a production/event company, TDC. The AWC stated that on October 31, 2011, Wine and TDC agreed for Wine to assist the company in securing funding. Apparently, Wine and the company arranged for a finder’s agreement, where Wine would receive compensation upon arranging for meetings between loan officers at banks and TDC.
Apparently, Wine’s efforts were not successful in ascertaining funding for TDC, leading him to recommend to five of LPL’s customers that they pursue such lending arrangements with TDC. The AWC reported that three of the five firm customers had agreed, and TDC was lent a total of $125,000.00 in the aggregate in exchange for short term demand notes.
The AWC stated that Wine had not informed his firm about his aforementioned business activities with TDC, and LPL Financial had not approved of such accordingly. LPL Financial terminated Wine on August 10, 2012, in connection with the aforementioned misconduct. FINRA found that Wine’s conduct in this regard was violative of FINRA Rules 2010 and 3270.
Public disclosure records reveal that Wine has been subject to five disclosure incidents. On August 8, 2008, Wine settled a customer dispute for $50,000.00 after a customer alleged misrepresentations with auction rate securities sales. Wine also became subject to a pending customer dispute on May 13, 2015, where a customer is requesting $25,000.00 after alleging that Wine advised the customer to invest in a promissory note in a company that went bankrupt.
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