Jeffrey A. Mohlman, a registered representative with Questar Capital Corporation, was permanently barred in all capacities from associating with any Financial Industry Regulatory Authority (FINRA) member after consenting to allegations that he had failed to cooperate with FINRA’s investigation into allegations that Mohlman engaged in unapproved and undisclosed private securities transactions. Letter of Acceptance, Waiver, and Consent, No. 2015044734401 (Sept. 17, 2015).
According to the AWC, on September 3, 2015, FINRA requested that Mohlman appear for on-the-record testimony, pursuant to Rule 8210, in connection with FINRA’s investigation into Mohlman’s alleged unapproved and undisclosed private securities transactions. Mohlman’s counsel reportedly e-mailed FINRA on September 9, 2015, indicated that while Mohlman acknowledged that he received FINRA’s request for his on-the-record testimony, Mohlman would not be cooperating at any point. FINRA found Mohlman’s refusal to testify to be violative of Rule 8210 and 2010, leading to his permanent bar.
FINRA registered representatives like Mohlman 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.
According to public disclosure records via FINRA’s BrokerCheck, Mohlman was twice separated from employment after allegations surfaced of misconduct. On September 17, 2002, State Farm had discharged Mohlman after alleging that he no longer met the firm’s internal sponsorship guidelines. On February 13, 2015, Questar Capital Corporation permitted Mohlman to resign amid allegations that Mohlman failed to follow firm policies and procedures regarding his participation in private securities transactions.
According to FINRA Rule 3270, no registered person like Mohlman 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.
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.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
