James Randall Clay of Clarksville Tennessee is a stockbroker formerly registered with U.S. Bancorp Investments Inc.James Randall Clay who has been charged by Financial Industry Regulatory Authority (FINRA) in a Complaint alleging that he engaged in unapproved outside business activities and falsified statements to his firm and FINRA personnel in regard to his business activities. Department of Enforcement v. James Randall Clay Disciplinary Proceeding No. 2014039775501 (Oct. 4 2017).
According to the Complaint, on September 26, 2012, eighty-five year old customer, DW, established an investment advisory account and brokerage account with Clay at U.S. Bancorp Investments Inc. and funded those accounts with $900,000.00. The Complaint stated that on November 25, 2013, Clay made arrangements with DW to buy his rental properties for $1,000,000.00 and spend an additional $500,000.00 to upgrade and repair those properties. Clay planned to utilize $250,000.00 in funds and finance the remaining $1,250,000.00 through DW at a 4.5 percent interest rate, where he would be responsible for paying DW $7,908.12 each month in connection with the arrangement.
The Complaint stated that in December 2013, unsolicited sell orders had been entered by Clay in the advisory account owned by DW for purposes of funding DW’s $500,000.00 loan to Clay. Clay ultimately started to collect rent from the tenants of those properties after acquiring them, and created an LLC, Clay Enterprises, for purposes of managing the properties. Clay then reportedly submitted the corporate documents with the Tennessee Secretary of State, Division of Business Services, where he was designated as registered agent.
The Complaint stated that Clay’s outside business activities were never reported to U.S. Bancorp. Particularly, Clay allegedly failed to notify the firm about his arrangement to buy the rental properties from DW. Clay also reportedly failed to notify the firm about the rental income he received or the establishment of Clay Enterprises. FINRA Department of Enforcement alleged that Clay’s conduct in that regard was violative of FINRA Rule 2010 and 3270.
The Complaint further detailed that in December of 2013, a complaint was lodged with U.S. Bancorp by DW’s son, JW, in regard to Clay’s rental property acquisition. In the course of the firm and FINRA inquiring about JW’s complaint, Clay reportedly lied by stating that he had no involvement in outside business activities, and that his sister was responsible for buying the rental properties. Apparently; however, Clay had signed in a personal capacity as the purchaser of those rental properties, was designated as Clay Enterprise’s registered agent, and his sister was never provided any rental income that had been received from the rental property tenants. FINRA alleged that Clay’s false statements to his firm concerning his lack of involvement in the outside business activities was violative of FINRA Rule 2010, and his misleading and false statements to FINRA constituted violations of FINRA Rules 2010 and 8210.
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