Jeffrey Michael Johnson (also known as Jeff Michael Johnson) of Birmingham Michigan a stockbroker formerly registered with Morgan Stanley has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that Johnson failed to comply with the terms of a FINRA Arbitration Award. Case No. 17-01186 (Mar. 15, 2018).
According to FINRA Public Disclosure, Johnson was subject of a customer initiated investment related arbitration claim where the customer was awarded $25,925.00 in damages based upon Johnson having been found liable on the customer’s claims including that Johnson: breached his contractual obligations to the customer; negligently transacted in the customer’s account; breached his fiduciary duties to the customer; violated the Michigan Uniform Securities act; effected transactions in the customer’s account that were not suitable for the customer; and defrauded the customer while he was associated with Raymond James Associates Inc. FINRA Arbitration No. 17-01186 (Nov. 9, 2017). Johnson reportedly failed to either pay the customer the Award or correspond with FINRA regarding his compliance with it.
This is not the first time that Johnson has been subject of a FINRA disciplinary action. In particular, FINRA Public Disclosure reveals that Johnson has also been fined $10,000.00 and suspended for seven months from associating with any FINRA member in any capacity based upon findings that Johnson engaged in private securities transactions without notifying his securities broker dealer employer, Morgan Stanley. Letter of Acceptance Waiver and Consent No. 2016049341201 (Oct. 23, 2017).
According to the AWC, arrangements were made between Johnson and a customer of Morgan Stanley in regards to a business venture. Evidently, the business venture, which focused on monetizing a fantasy sports game, involved the establishment of two businesses, Teaser Fever and FourPlay Sports, LLC, which were controlled and owned by Johnson. The AWC stated that FourPlay Sports was actively promoted by Johnson, resulting in a total of $310,000.00 in debt and equity financing being raised from eleven investors – four of whom were Morgan Stanley customers – in 2015. Indeed, investors were supposedly sold convertible promissory notes and equities interest in FourPlay Sports LLC.
Evidently, Morgan Stanley was not made aware that Johnson engaged in outside business activities concerning Teaser Fever. Additionally, FINRA stated that Johnson never received approval from Morgan Stanley to engage in private securities transaction concerning FourPlay Sports LLC. In fact, Johnson was not even allowed to engage in any outside business activities concerning FourPlay Sports at first. It was not until Johnson made an additional request that his outside business activity was approved. However, Johnson’s disclosure of FourPlay Sports, which allowed for its approval, was incomplete – he never disclosed his role as the owner and controller of the business, or that he arranged for investors to purchase $310,000.00 worth of investments. Evidently, Johnson also lied on the firm’s compliance attestations concerning his activities. FINRA found Johnson’s conduct violative of FINRA Rules 2010, 3280, 3270 and National Association of Securities Dealers (NASD) Rule 3040.
FINRA Public Disclosure additionally confirms that a customer initiated investment related arbitration claim concerning Johnson’s conduct was resolved for $110,000.00 in damages founded on accusations that the customers were provided bad advice by Johnson concerning variable annuity liquidations while Johnson was associated with Morgan Stanley. FINRA Arbitration No. 15-02069 (Oct. 7, 2016). Additionally, on June 29, 2018, a customer initiated investment related complaint concerning Johnson’s activities was settled for $18,294.54 in damages based upon accusations that the customer’s investment instructions or risk tolerance had been disregarded by Johnson with respect to the stock trades placed in the customer’s account while Johnson was associated with Morgan Stanley.
