Eric J. Arnett, of Spring Hill, Florida, a stockbroker formerly registered with Dalton Strategic Investment Services, has been charged by Financial Industry Regulatory Authority (FINRA) in a Complaint which alleged that Arnett, inter alia, engaged in unauthorized outside business activities. Letter of Acceptance, Waiver and Consent, No. 2015044778302. (Feb. 13, 2017).
According to the Complaint, from January of 2010 to January of 2013, while Arnett was associated with Dalton Strategic Investment Services, he took part in an outside business activity which via operating Rnett Consulting – an entity which was in the business of providing marketing consulting services. Apparently, Arnett pursued this business along with several members of Dalton Strategic Investment Services, which included his business partner, MD.
The Complaint stated that from August of 2010 to January of 2013, thirty-five checks had been received by Arnett from MD which totaled $60,000.00, in which twenty-two of the checks were directed to CAS – an entity in the business of providing managed commodities and futures trading accounts. The Complaint alleged that CAS was run by Arnett’s associate, CS – who previously worked with Dalton Strategic Investment Services. Critically, FINRA stated that Dalton Strategic Investment Services had not authorized or offered CAS investments.
The Complaint further detailed that Arnett was cognizant that customers had been referred by MD to CAS, wherein the referrals were partially generated by way of Arnett’s marketing strategies. Twenty-eight individuals were allegedly referred to CAS, resulting in investments made by the individuals which totaled $2,000,000.00. The Complaint stated that a number of customers which had been referred to CAS by MD had sustained significant investment losses as a result.
According to the Complaint, registered representatives including Arnett were required to inform the firm concerning outside business activities; however, Arnett never did so. Particularly, the Complaint stated that Dalton Strategic Investment Services was never notified by Arnett concerning his marketing efforts with Rnett. Consequently, FINRA alleged that Arnett’s conduct was violative of FINRA Rules 2010 and 3270, as well as NASD Rule 3030.
FINRA Public Disclosure reveals that on August 31, 2010, a customer filed an investment related written complaint involving Arnett’s conduct, in which the customer requested $13,862.66 in damages based upon allegations that Arnett made misrepresentations and unsuitable investment recommendations to the customer concerning options transactions.
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