James Emory Poe, of Forth Worth, Texas, an operator and joint owner of Jim Poe & Associates, Inc., was subject of sanctions including an undertaking, revocation, and cease and desist imposed by the State of Texas Securities Board pursuant to a Disciplinary Order containing allegations that he, inter alia, charged excessive fund management fees, omitted facts concerning life settlements to customers, and engaged in unregistered securities activities while associated with Fox Financial Management Corporation – a brokerage firm expelled by FINRA in January 2017. Disciplinary Order No. I616-REV-05 (Mar. 18, 2016).
According to the Order, in 2013, Jim Poe & Associates, Inc. failed to inform customers that the firm’s charging of six percent in annual management fees exceeded the norms of the industry, and that the firm’s customers could spend less to obtain services which were similar to Jim Poe & Associates, Inc. The Order indicated that the firm was required to notify customers pursuant to Texas State Securities Board Rules and Regulations Section 116.13(a).
The Order further stated that between July of 2011 and August of 2015, customers received investment recommendations from Poe in regard to life settlements which had been issued by an entity that Poe controlled, SRP-LS200, LLC. Apparently, seventy-five percent returns where promised by Poe to life settlement customers.
Apparently, even though customers were informed that SRP-LS200 would utilize investor funds to address costs associated with the life settlement contracts, customers were deprived of information about payments to International Alternatives PR, LLC, another company Poe controlled which he utilized to facilitative life insurance policy selections. The Order revealed that International Alternatives PR, LLC, actually received twenty percent of customers’ monies from SRP-LS200. The Order stated that Poe’s omissions in this regard were fraudulent.
Moreover, commissions had evidently been paid to Poe between July of 2011 and 2015 via his facilitation of customers’ life settlement purchases. Apparently, the SRP-LS200 life settlement transactions were effected outside the auspices of Fox Financial Management Corporation. These transactions were also effected by Poe despite lacking any dealer registration with Texas Securities Commissioner during the period in which they occurred. Texas Securities Commissioner found that Poe’s conduct in this regard was violative of Texas Securities Act Section 12.A.
Further, Poe was fined and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he engaged in private securities transactions and outside business activities without notifying his firm, and untimely responded to FINRA staff concerning an investigation into allegations of his misconduct. Letter of Acceptance, Waiver and Consent, No. 2013036824401 (Oct. 20, 2014).
According to the AWC, twenty-two investments were made by customers between July 29, 2011, and October 19, 2012, wherein customers contributed nearly $2,250,000.00 to SRP in order to effect life insurance settlement purchases. Apparently, these transactions were effected during the time that Poe was associated with Fox Financial Management Corporation. Apparently, SRP received management fees totaling $686,230.00 in connection with the transactions. The AWC stated that Poe received compensation associated with the structuring of the life settlements.
FINRA found that Poe’s activities in this regard were violative of FINRA Rule 2010 and FINRA Rule 3270, and his sales of securities away from his firm without first procuring the firm’s approval was conduct violative of FINRA Rule 2010 and NASD Rule 3040. Poe also reportedly disclosed information to FINRA six months after requested by FINRA; conduct FINRA found to be violative of Rule 2010 and 8210.
Prior to the Texas Disciplinary Order and FINRA AWC, Poe was censured and fined $35,000.00 by the Securities and Exchange Commission (SEC) pursuant to an Order Instituting Administrative and Cease-And Desist Proceedings containing findings that Poe, from 2009 to 2012, received performance fees totaling $610,762.00 from clients when the fees were prohibited based on Advisers Act Section 205(a)(1). In the Matter of Jim Poe and Associates, Inc., et al., No. 3-15661 (Dec. 24, 2013).
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that on March 27, 2013, a customer initiated investment related civil action involving Poe’s conduct was settled for $125,000.00 in damages based upon allegations that Poe made unsuitable investment recommendations to the customer concerning viatical settlements and direct investment products.
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