Harold E. Wilson, a former broker with Ameritas Investment Corp., has been permanently barred from the financial industry for engaging in private securities transactions without disclosing this activity to his firm.
In addition, Wilson was barred for failing to respond to repeated requests for information on these transactions from the Financial Industry Regulatory Authority (FINRA). He was also ordered to pay restitution of $10,000 plus interest to customers’ from whom he misappropriated funds.
Wilson Barred By FINRA for Ignoring Requests for Information
FINRA’s Office of Hearing Officers entered a default decision on April 9 that bars Wilson from associating with any FINRA-regulated firm in any capacity. The default judgment was entered after Wilson failed to respond to the requests for information in violation FINRA Rule 8210.
Harold E. Wilson’s Fraudulent History
Wilson first registered with FINRA in April 2005. From September 2007 through March 2011, he was employed as a general securities representative with Ameritas, a FINRA-regulated firm.
In 2009 and 2010, Wilson undertook private securities transactions with two couples without disclosing this activity to Ameritas, his employing broker dealer at the time. Disclosure was required by Rule 3040 of the National Association of Securities Dealers (NASD), a FINRA predecessor, the default decision said. The conduct also violated FINRA Rule 2010 concerning standards of commercial honor and equitable principles of trade.
FINRA’s Department of Enforcement Files Complaint
FINRA’s Department of Enforcement filed its complaint against Wilson in December 2011. Because Wilson did not answer or otherwise respond to the complaint, the department filed a motion for entry of a default decision in February. Wilson also failed to reply to the motion.
As of the date of the default decision, Wilson had not filed an answer or otherwise responded to the complaint despite four notices. Therefore, FINRA permitted the entry of the default decision.
Though Wilson has not been associated with a FINRA-regulated firm since March 2011, he remains subject to FINRA’s jurisdiction pursuant to its bylaws because the complaint was filed within two years of his last association with a FINRA member.
The default decision states that in 2009 and 2010, Wilson engaged in private securities transactions with two married couples without notifying his firm in advance as required by NASD rules. The couples are identified in the complaint only as Mr. and Mrs. B and Mr. and Mrs. C. Wilson persuaded these couples to loan him money as part of a gold-coin investment scheme.
Wilson’s Victims
Mr. and Mrs. B — who had purchased insurance products from Wilson in the past — became involved in the scheme in December 2009, when Wilson persuaded to them loan him $10,000 for one month. He promised a 10 percent for that single month, the default decision said.
Wilson told Mr. B that he would receive repayment from the profits Wilson would earn though trading in imported gold. Wilson gave Mr. B a personal check for $11,000 post-dated to Jan. 11, 2010, as security for the investment.
In January 2010, Mr. and Mrs. B contacted Wilson looking for their payment. He promised to pay them $12,000 in February 2010, but he never paid, the default decision said.
In March 2010, Mr. and Mrs. B went to deposit Wilson’s $11,000 check, but they discovered that Wilson’s checking account had been closed. Wilson had not repaid Mr. and Mrs. B as of the date of the default decision.
Although FINRA rules require brokers to inform their firms ahead of time if they plan to engage in any outside transactions, Wilson never informed Ameritas about this supposed imported-gold transaction, or about his dealings with Mr. and Mrs. B.
The default decision identifies the second couple from whom Wilson took money to invest in gold coins as Mr. and Mrs. C. This couple met Wilson when he rented space in a storage facility they managed.
Mr. and Mrs. C met with Wilson to discuss life insurance but Wilson persuaded them to loan him money to invest in the gold coins instead, the default decision said.
Wilson’s purported plan was to buy the coins, mark them up and resell them to other customers at a profit. Mr. and Mrs. C were not supposed to take possession of the coins. Wilson told them that he had made similar gold-coin investment deals with 70 other customers, the default decision said.
In December 2010, Mr. and Mrs. C gave Wilson $2,120 in cash. He promised to repay the principal plus $600 in six days, a 28 percent return in less than a week, or a roughly 1,700 percent return if calculated on a yearly basis, the default decision said.
In January and early February 2011, Mr. and Mrs. C made repeated attempts to contact Wilson but they did not succeed. They finally called Ameritas.
In March 2011, Wilson gave Mr. and Mrs. C back their $2,120 investment without interest or profits. Like his dealings with Mr. and Mrs. B, Wilson did not disclose his transaction with Mr. and Mrs. C to Ameritas before his participation, the default decision said.
Wilson’s Violations
Also in March 2011, Wilson was terminated by Ameritas for his failure to follow the firm’s police and procedures regarding outside business activities and his failure to respond to their requests for information, according to FINRA public disclosure records.
As for FINRA, Wilson violated NASD Rule 3040 for engaging in private securities transaction without informing his firm. Because the definition of security includes, among other things, investment contracts, Wilson’s gathering of investments for the gold-coin scheme qualified as selling securities for the purposes of the rule, the default decision said.
In addition, Wilson violated FINRA rules by failing to provide information as requested. FINRA first sent two letters by certified mail, and then sent copies of the first and second requests by email, the default decision said. To date, Wilson has failed to respond in any way to FINRA’s requests for information.
Guiliano Law Group
If you have been the victim of securities fraud you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
