James Albert Pettit of Glastonbury Connecticut a stockbroker formerly employed by Janney Montgomery Scott LLC has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on accusations that he declined to provide FINRA with information about his business activities. Case No. 2017054428401 (Mar. 5, 2018).
FINRA Public Disclosure reveals that Pettit is the subject of two additional regulatory infractions. Particularly, Pettit is referenced in a Connecticut Department of Banking Notice of Intent to Deny Registration as Broker-Dealer Agent and Investment Adviser Agent supported by allegations that Pettit, inter alia, engaged in unauthorized customer loan arrangements. In the Matter of: James Albert Pettit Case No. NDCDF-17-8218-S (May 15, 2017).
According to the Notice, when Pettit became registered as an agent and advisor of former employer, Janney Montgomery Scott LLC, he held a minority interest in an entity which was also owned by a customer of the firm. Apparently, the customer’s relationship with Pettit came before the customer established accounts at Janney Montgomery Scott LLC.
The Notice stated that Pettit sought permission from Janney Montgomery Scott to participate in the outside business activity involving the entity owned by the customer. The firm reportedly provided Pettit with approval conditioned upon restrictions being placed on Pettit’s activities. For example, Pettit was disallowed from writing checks from the customer’s entity-owned accounts.
The Notice detailed that between October 27, 2011 and November 3, 2014, unbeknownst to the customer, Pettit wrote checks that totaled $128,039.87 from the customer’s entity-account, where those checks were made out to an entity that Pettit exclusively controlled. Apparently, Pettit referred to the transactions as having been loans to himself.
The Notice additionally stated that in June of 2011, $50,000.00 had been lent to Pettit by another customer of Janney Montgomery Scott who held an advisory account. Moreover, a third customer lent Pettit $8,000.00 on March 18, 2014. Throughout this period, Janney Montgomery Scott’s policies explicitly prohibited Pettit from borrowing funds from customers unless the lending arrangement was permitted by the firm’s branch manager. Additionally, throughout this period, Pettit apparently confirmed within Janney Montgomery Scott’s compliance questionnaires that he understood the firm’s prohibition on customer loans. Yet, Pettit reportedly violated the firm’s policies by failing to procure approval prior to borrowing customers’ funds.
The Commissioner of the Department of Banking alleged that Pettit’s unauthorized borrowing arrangements were violative of Regulations of Connecticut State Agencies Sections 36b-31-15b(a)(1), 36b-31-15d(a)(3), 36b-31-15c(a)(6) and 36b-31-15b(c). Moreover, the Commissioner alleged that Pettit’s unapproved outside business activities were violative of FINRA Rule 3270 and Regulations of Connecticut State Agencies Section 36b-31-15b(c).
Pettit’s registration with Janney Montgomery Scott was terminated on December 17, 2014. Between January 21, 2015 and February 23, 2016, Pettit was registered with Ameriprise Financial Services, Inc.
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