Francisco G. Hervella, of Miami, Florida, a stockbroker with Invex Inc., was fined $50,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity for two years after consenting to findings that he engaged in unauthorized outside business activities as well as unauthorized private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2015044201103 (June 13, 2016).
According to the AWC, in June 2011, Hervella informed Invex that he was part owner of a company, Delaware Entity, and indicated to Invex upon hire that he expected to receive compensation in the future pertaining to such Delaware Entity. Apparently, Hervella did not provide his firm with any information regarding his activities regarding Delaware Entity at any point in the future as required.
The AWC stated that on June 29, 2011, at a time when Hervella was still employed with Invex, his business partner and him started BVI Entity, which was a subsidiary of Delaware Entity. This business transaction was apparently outside the auspices of Invex. Hervella reportedly owned fifty percent of BVI Entity. The AWC noted that Hervella failed to furnish notice or otherwise apprise Invex of Hervella’s ownership of BVI, and Invex did not approve of such ownership.
Additionally, the AWC stated that in September 2013, BVI Entity served as director of a New Zealand Entity, a separate business from BVI Entity and Delaware Entity. Hervella purportedly directed New Zealand’s affairs on behalf of BVI, and assumed the role of signatory. FINRA found that Hervella’s conduct in this regard constituted an outside business activity, and Hervella failed to inform Invex regarding such. Invex apparently did not approve of Hervella’s actions on behalf of New Zealand Entity. FINRA found that Hervella’s unauthorized outside business activities were violative of FINRA Rules 2010 and 3270.
The AWC further reported that Hervella engaged in private securities transactions within Country A. One of the transactions, according to the AWC, was for the purpose of assisting a Spain based company transfer funds from an entity operating in Country A back to Spain via advanced currency structuring transactions. Particularly, in the transactions, which converted the currency of Country A to United States dollars, involved a purchase of $250,000,000.00 in United States Treasuries.
Apparently, Hervella participated through structuring the aforementioned transactions, and overseeing the facilitation of such transactions. The AWC stated that Hervella received $2,000,000.00 as a result of advising and participating in this regard. However, Hervella’s participation of such securities transactions was done outside the auspices of Invex. FINRA found that Hervella did not inform Invex of his involvement, nor his compensation derived from such participation.
Further, from September 2013 through March 2014, Hervella engaged in two additional private securities transactions in Country B. Hervella reportedly assisted two customers purchase $4,000,000.00 worth of Country B bonds in exchange for $4,000,000.00 worth of invoices payable in United States dollars. Hervella apparently structured and facilitated the transactions, receiving $125,000.00 for his efforts. This transaction additionally fell outside of the auspices of Invex, and Hervella did not notify Invex regarding his involvement and compensation resulting from such participation. As such, FINRA found that Hervella’s unauthorized private securities transactions to be violative of FINRA Rules 2010 and NASD Rule 3040.
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