Jeremy Taylor Johnson of Murrieta California a stockbroker formerly registered with Torch Securities LLC has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity given findings of Johnson refusing to cooperate with FINRA’s investigators when he was under investigation for possible sales practice violations including misrepresentation and unsuitability. Letter of Acceptance Waiver and Consent No. 2019062311701 (Mar. 26, 2021).
According to the AWC, Johnson was the subject of a FINRA investigation in which he was being examined for potentially offering and selling securities that were unsuitable for customers and potentially omitting and misrepresenting information in regard to those securities offerings.
The AWC stated that on February 12, 2021, Johnson was asked by FINRA to testify regarding his securities activities at Torch Securities. He was required to comply with this request under Rule 8210. But five days after that request was made, Johnson’s legal counsel informed FINRA that Johnson would not testify at any point in the investigation. The stockbroker violated FINRA Rules 2010 and 8210 in this respect.
This is not the first time that Johnson has been subject of a disciplinary action brought by a securities regulator. He has been barred by Securities and Exchange Commission (SEC) from being a stockbroker or investment adviser representative according to an SEC Order based on allegations of Johnson defrauding investors and misappropriating their funds. In the Matter of Jeremy Johnson, Administrative Proceeding File No. 3-20213 (Jan. 29, 2021).
According to the SEC Complaint preceding the Order, from September of 2017 to February of 2019, Johnson and his brother established and oversaw operations for multiple issuers. These included California-based limited liability companies including GPA Enterprises LLC, Zabala Farms Group LLC, Target Equity LLC, Valley View Enterprises LLC and Smart Initiatives LLC. SEC alleged that the brothers also ran Green Bud Initiatives LLC (GBI Marketing) and C-Quadrant LLC.
The Johnsons, both in their individual capacity and through GBI Marketing, allegedly did business as unregistered broker-dealers. The Order stated that prospective investors had been solicited by the Johnsons and GBI to make investments in unregistered securities offerings of the issuers and C-Quadrant LLC. SEC indicated that the securities offerings related to the issuers’ initiative of purchasing and developing a marijuana farm and investing in C-Quadrant’s CBD extraction facility. Both the farm and the facility were located in Salinas.
According to SEC, approximately 300 investors collectively contributed about $20,000,000.00 towards the Johnsons and GBI Marketing to pursue the investments in the farm and facility. But investors had been purportedly misled by the Johnsons as it pertained to the compensation that the Johnsons would earn. SEC also alleged that $2,700,000.00 in investor funds had been misappropriated.
SEC contended that omissions and misrepresentations had been made by the Johnsons in all the offerings. The regulator alleged that investors were deceived as to the returns on their investments. Johnson supposedly told investors that they would obtain as much as 200 percent annual returns based on the offering that they invested in. The Complaint also contained allegations of Johnson making false representations regarding a $2,900,000.00 loan which had been secured by the real property of C-Quadrant. That loan was apparently supposed to go towards business development but was used instead to make payments to investors in a different entity.
Prior to the Order, a judgement had been entered against Johnsn on January 28, 2021 in which Johnson was permanently enjoined from committing violations of Securities Act of 1934 Sections 10(b) and 15(a), SEC Rule 10b-5, and Securities Act of 1933 Sections 5(a), 5(c) and 17(a). Civil Action No. 20-cv-01493-MCS-SHK.
Johnson’s registration with Torch Securities LLC has been terminated as of April 21, 2020.