Patrick Dennis Combs, of Houston, Texas, a stockbroker formerly registered with Morgan Stanley, has been fined $7,500.00 and suspended for seven months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he participated in private securities transactions, and concealed these activities from his firm. Letter of Acceptance, Waiver and Consent, No. 2016048688001 (Mar. 1, 2017).
According to the AWC, from August of 2012 to September of 2012, Combs effected a private securities transaction involving $500,000.00 of a firm customer’s funds. Particularly, in 2012, Combs spoke with an individual who sought to have a professional athlete invest and market the individual’s privately held entity. Apparently, a meeting was facilitated by Combs between the individual and a professional athlete and customer of Morgan Stanley.
The AWC revealed that from August of 2012 to September of 2012, Combs corresponded between the entity and the professional athlete. Combs evidently formulated a plan for the customer to invest in the entity and serve as the entity’s spokesperson. Subsequently, $500,000.00 was invested by the athlete in the entity in return for being provided a convertible promissory note with a February 9, 2014 maturity, and the athlete agreed to be the entity’s spokesperson. The AWC stated that the transaction which Combs facilitated was never made known to Morgan Stanley. Consequently, Combs evidently sold away from his firm, in which his conduct was found by FINRA to be violative of Rule 2010 and NASD Rule 3040.
The AWC further stated that the firm’s compliance questionnaires from 2013 and 2014 were submitted by Combs, in which Combs denied ever having engaged in private securities transactions within the time frame which he factually done so. The AWC stated that Combs’ falsification of the firm’s documents in this regard was conduct violative of FINRA Rule 2010.
FINRA Public Disclosure reveals that on January 7, 2016, a customer filed an investment related civil action involving Combs’s conduct based upon allegations that Combs made misrepresentations to the customer concerning an investment offered outside the auspices of Morgan Stanley. Combs was terminated from Morgan Stanley on February 29, 2016, based upon allegations that he facilitated a securities transaction with a customer away from the firm.
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