Dennis Allen Hayes of Melville New York a stockbroker formerly registered with Newbridge Securities Corporation has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that (1) Hayes sold away from Newbridge Securities Corporation (2) Hayes failed to document his communications with the firm regarding his activities and (3) Hayes failed to comply with FINRA’s request during an investigation into his activities. Department of Enforcement v. Dennis Allen Hayes Disciplinary Proceeding No. 2016050883001 (Jan. 11, 2019).
According to the Complaint, eight of the firm’s customers and one non-firm investor were induced by Hayes into making a combined $2,700,000.00 investment in five entities. One of those entities allegedly involved a penny stock company in a share exchange agreement which was never disclosed by Hayes to Newbridge Securities corporation. The Complaint stated that customers had been sold BTInc promissory notes and common stock, IRLLC and MSLLC promissory notes, KIInc (BTInc’s successor) promissory notes and common stock, and FXInc. Common stock. The Complaint stated that Hayes employed a friend of his to be principal of those five entities.
Allegedly, some of the companies or their affiliates had paid Hayes $130,000.00 in 2012. Particularly, the Complaint stated that Hayes was paid $10,000.00 by MSLLC, $64,882 by IRLLC, and $54,000.00 by affiliates of KIInc and IRLLC. Moreover, the Complaint alleged that IRLLC, MSLLC, KIInc received personal contributions from Hayes between 2009 and 2016. By the Complaint was filed, allegedly FXInc, KIInc, IRLLC and MSLLC were all defunct. KIInc reportedly filed for bankruptcy.
The Complaint alleged that Hayes engaged in private securities transactions involving thirty-six investments made by the nine investors. The investments were all supposedly made outside Hayes’ scope of employment at Newbridge Securities Corporation. Moreover, the Complaint alleged Hayes never informed the firm about his involvement in the transactions effected outside its auspices. FINRA Department of Enforcement alleged that Hayes’ conduct was violative of FINRA Rules, 2010, 3280, and NASD Conduct Rule 3040.
The Complaint further alleged that during the time Hayes was employed by the firm, he corresponded with a customer using his personal e-mail rather than the company’s e-mail. Hayes reportedly failed to preserve those communications, causing the firm to violate FINRA Rule 2010, NASD Rule 3110(a), and Securities Exchange Act Rule 17a-4. FINRA Department of Enforcement alleged that Hayes’ conduct was violative of FINRA Rules 2010 and 4511 in this respect.
Further, the Complaint alleged that Hayes failed to furnish documents and information to FINRA. Allegedly, FINRA sent Hayes a request on April 25, 2017 calling upon him to provide details about complaints received from customers, CO and EW, regarding investments in MSLLC, KIInc, and BTInc. Hayes was expected to comply by May 12, 2017; however, Hayes apparently never responded.
Ultimately, Hayes contacted FINRA and obtained an extension until December 4, 2017 to cooperate with its requests. However, the Complaint alleged that Hayes again failed to cooperate with the requests by the deadline. Then, Hayes reportedly contacted FINRA on January 8, 2018, confirming that he received FINRA’s requests but would not be responding, citing health issues. The Complaint stated that Hayes never cooperated with its requests; conduct violative of FINRA Rule 2010 and 8320.
FINRA Public Disclosure reveals that Hayes has been identified in seven customer initiated investment related disputes containing accusations of his misconduct while employed with Newbridge Securities Corporation. Specifically, a customer initiated investment related arbitration claim involving Hayes’ activities was settled for $120,000.00 in damages founded on allegations that Hayes failed to repay the customer’s principal invested in real estate security, promissory note and penny stock investments; executed unsuitable sales of investments; breached his fiduciary duties to the customer; and made fraudulent omissions and misrepresentations. FINRA Arbitration No. 16-02002 (Aug. 3, 2017).
Thereafter, a customer filed an investment related arbitration claim concerning Hayes’ activities where the customer requested $650,000.00 in damages based upon accusations that Hayes effected over-the-counter equities, promissory note, and equity transactions in the customer’s account on an unauthorized basis, and poorly advised the customer concerning private placement investments. FINRA Arbitration No. 17-02853 (Nov. 27, 2017). Then, a customer initiated investment related arbitration claim regarding Hayes’ conduct was resolved for $30,000.00 in damages supported by allegations of suitability and supervisory failures pertaining to the customer’s private securities investments. FINRA Arbitration No. 17-01875 (July 17, 2018).
Additionally, a customer initiated investment related arbitration claim involving Hayes’ activities was settled for $760,000.00 in damages founded on accusations of negligence and suitability regarding the customer’s non-traded real estate investment trust holdings. FINRA Arbitration No. 17-03125 (Oct. 22, 2018). Moreover, a customer filed an investment related arbitration claim concerning Hayes’ conduct in which the customer sought $500,000.00 in damages based upon allegations of violation of FINRA rules, selling away, negligence, misrepresentation, omission, supervisory failures, and suitability pertaining to the customer’s alternative investments. FINRA Arbitration No. 18-03996 (Nov. 26, 2018).
Hayes’ registration with Newbridge Securities Corporation was terminated as of September 16, 2016.
