Lawson Financial Corporation, a brokerage firm headquartered in Phoenix, Arizona, as well as Robert Lawson (president, chief executive officer, and chief compliance officer), and Pamela Lawson (owner and chief operating officer) were sanctioned by Financial Industry Regulatory Authority (FINRA) Office of Hearing Officers according to an Order Accepting Offer of Settlement containing findings that the firm and the Lawsons engaged in securities fraud in the sale of municipal revenue bonds. Department of Enforcement v. Lawson Financial Corporation, et al., No. 2014043854401 (Jan. 31, 2017).
According to the Order, between 2013 and 2015, the firm and the Lawsons perpetrated securities fraud concerning Hillcrest and Destiny Municipal Bonds, which were issued to raise funds for a charter school in Arizona; and Decatur and Cullman Municipal Bonds, which were issued to fund a couple Alabama based living facilities. Fraudulent sales for all the bond funds in question, which Lawson Financial Corporation was underwriter for, reportedly occurred in the secondary market, with the Hillcrest Bonds also having been sold in the primary markets.
FINRA found that Lawson Financial Corporation and Robert Lawson omitted material information from investors pertaining to the vast financial problems which the charter school and assisted living facilities dealt with, in order to prevent investors from becoming cognizant of the bonds’ risks. The Order also stated that the firm and Robert Lawson omitted from investors that the Lawsons served as co-trustees of a charitable remainder trust which had been funded by a deceased firm customer, wherein the trust was the source of $14,000,000.00 in funds which the assisted living facilities utilized in order to cover debt obligations. Only $1,800,000.00 of funds had been repaid to the trust, according to the Order.
FINRA found that the firm and Robert Lawson willfully violated Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, and MSRB Rule G-17. Additionally, the firm and Robert Lawson were found by FINRA to have violated MSRB Rule G-19 by making unsuitable recommendations to investors regarding the municipal revenue bonds. FINRA further found that Robert and Pamela Lawson violated FINRA Rule 2010 by breaching their fiduciary obligations to the trust, and violated Rule 2010 and 2150(a) for the misappropriation of customer funds.
Consequently, Lawson Financial Corporation has been expelled from FINRA membership; Robert Lawson has been permanently barred by FINRA from associating, in any capacity, with any FINRA member firm, and Pamela Lawson has been fined $30,000.00 and suspended for two years from associating with any FINRA member firm pursuant to the terms of the Order.
FINRA Public Disclosure reveals that Robert Lawson has been identified in seven customer initiated investment related disputes containing allegations of Lawson’s misconduct while employed with Lawson Financial Corporation. Specifically, on April 1, 1999, a customer initiated investment related complaint involving Lawson’s conduct was settled for $25,000.00 in damages based upon allegations that Lawson made misrepresentations and omissions to the customer concerning municipal bond products, breached his fiduciary and contractual duties, and violated the Arizona Consumer Fraud Act.
Subsequently, on October 5, 1999, a customer was awarded $1,925.00 in damages according to an investment related arbitration claim involving Lawson’s misconduct, based upon allegations that Lawson misled the customer in reference to call features on municipal debt products that the customer purchased and sustained losses from. On February 16, 2001, another customer initiated investment related arbitration claim regarding Lawson’s activities was resolved for $6,500.00 in damages based upon allegations that Lawson effected bond transactions in the customer’s account which were not suitable.
Furthermore, on November 17, 2003, a customer was awarded $88,365.72 in damages according to an investment related arbitration claim regarding Lawson’s activities, based upon allegations that Lawson effected unsuitable municipal debt transactions in the customer’s account, and made misrepresentations to the customer concerning bond investments. Additionally, on May 7, 2004, a customer was awarded $294,590.54 in damages according to an investment related arbitration claim involving Lawson’s misconduct, based upon allegations that Lawson made misrepresentations and omissions to the customer, effected unsuitable transactions in the customer’s account, and breached his fiduciary duties in reference to the customer’s municipal bond transactions.
On October 14, 2010, another customer was awarded $237,500.00 in damages according to an investment related arbitration claim involving Lawson’s misconduct, based upon allegations that Lawson effected real estate security transactions in the customer’s account which were not suitable, and negligently managed the customer’s investments. Moreover, on December 14, 2016, a customer filed an investment related arbitration claim regarding Lawson’s activities, in which the customer requested $20,000.00 in damages based upon allegations that Lawson made misrepresentations to the customer concerning municipal bonds which the customer purchased and sustained losses.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
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