Christopher S. Scott of Colorado Springs, Colorado, a registered representative with Geneos Wealth Management, Inc., was suspended from associating with any Financial Industry Regulatory Authority (FINRA) member firm and fined $5,000 after consenting to findings that he borrowed money without permission or notice to his employer. Letter of Acceptance, Waiver and Consent, No. 2015044007101 (Nov. 15, 2015).
According to the AWC, in 2013, Scott’s firm’s written supervisory procedures prohibited registered representatives from borrowing money or securities from customers. The AWC indicated that Scott had borrowed $10,000 from a firm customer’s brokerage account. The account was reportedly for a family trust where Scott was a co-trustee and one of several beneficiaries. Scott was also listed as the assigned representative of the trust brokerage account.
The AWC stated that the loan from the trust was memorialized in a promissory note stating that the loan carried an annual interest charge of two percent and required repayment before December 2018. The AWC indicated that Scott did not notify his firm about the loan. Further, in April 2014, Scott had reportedly made inaccurate statements in a compliance questionnaire, where he answered “no” to the question of whether he had ever borrowed money from a customer. FINRA found Scott’s conduct to be in violation of FINRA Rules 3240 and 2010.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Public disclosure records reveal that Scott was discharged by Geneos on January 5, 2015, amid allegations that he violated the firm’s written procedures with respect to reporting customer complaints. A complaint apparently reported to the firm two weeks after it was received by the representative when the firm required immediate reporting.
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