Michael Tepedino, a Stockbroker for Allstate, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he failed to cooperate with FINRA in their investigations into allegations that Tepedino was involved in outside business activities. Letter of Acceptance, Waiver, and Consent, No. 2014042533801 (June 2, 2015). Tepedino is barred from acting as a broker or otherwise associating with firms that sell securities to the public, according to FINRA.
According to the AWC, on August 25, 2014, Allstate had terminated Tepedino’s employment with the firm. On September 5, 2014, Allstate indicated to FINRA via a filed Form U5 that Tepedino was terminated as a result of operating an independent insurance agency as well as failing to disclose to Allstate his involvement in the agency.
The AWC noted that on March 20, 2015, FINRA had requested that Tepedino provide information and documentation, pursuant to Rule 8210, regarding the allegations of his misconduct. After failing to respond to FINRA by their deadlines, Tepedino eventually got in contact with FINRA on April 21, 2015. The AWC reported that while Tepedino had acknowledged receipt of FINRA’s request, he would not be cooperating with their investigation. FINRA found Tepedino’s conduct to be in violation of Rules 8210 as well as 2010, leading to Tepedino’s permanent bar.
FINRA Rule 3270 has stated that no registered person like Tepedino may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his/her member firm, unless he/she is provided prior written notice to the member. Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
As a general matter, stockbrokers are only permitted to engage in the solicitation or sale of investments and investment related products approved by their firm. However, quite frequently, stockbrokers solicit, participate, or directly engage in the sale of typically unregistered securities or investments without the approval and outside of the auspices of their firm. These investments may take on many forms, and may include the recommendation of an outside money manager, or a hedge fund, which may sometimes turn out to be a Ponzi scheme. Sometimes these outside investments may include off-shore securities, insurance trusts, stocks or ownership interests in small businesses, startup ventures, corporate debentures, mortgage notes, private placements, promissory notes, oil & gas interests, real estate partnerships, pre-IPO shares, and a variety of other investments.
FINRA registered representatives like Tepedino who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
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