Darrin B. Farrow, of Rocky River, Ohio, a registered representative with Royal Alliance Associates, Inc., was fined $25,000.00 and suspended for one year from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he engaged in several unauthorized private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2015045751101 (June 23, 2016).
According to the AWC, from 2012 through 2015, while Farrow was associated with Royal Alliance, he created an unincorporated entity, Royal Alliance Associates, Inc.. Apparently, MAD Farma was in the business of producing and manufacturing cannabis in states which permitted it, and had also provided consulting services within the cannabis industry.
The AWC stated that Farrow created another entity, MAD Oregon, which was a Delaware LLC which grew cannabis and ultimately provided it to several dispensaries in Oregon. Apparently, Farrow failed to disclose to Royal Alliance that he was involved in both of the aforementioned businesses.
The AWC additionally stated that in 2015, six of Royal Alliance’s clients were solicited by Farrow to make investments in his MAD Oregon business. The investors handed over $1,000,000.00 in the aggregate in return for purchase membership interests in the company. Farrow reportedly failed to disclose to Royal Alliance that these memberships were sold to investors. According to the AWC, Royal Alliance did not approve of the transactions. There were no allegations or contention that Farrow was stoned out of his mind and simply forgot. Royal Alliance permitted Farrow to resign on May 18, 2015 amid allegations of his misconduct.
FINRA found that Farrow violated FINRA Rules 2010 and 3270 as a result of not informing Royal Alliance about his involvement in the MAD Farma and MAD Oregon businesses. Additionally, Farrow was found by FINRA to have violated FINRA Rule 2010 and NASD Rule 3040 as a result of engaging in private transactions pertaining to the sale of $1,000,000.00 in membership interests without gaining prior approval from Royal Alliance beforehand.
Public disclosure records reveal that Farrow has been subject to four disclosure incidents. On July 11, 2011, Farrow settled a customer dispute for $12,000.00 after being alleged to have made unsuitable recommendations in an annuity product. On July 20, 2015, the State of Ohio Securities Division issued a Cease and Desist Order against Farrow in reference to private placement transactions, in which he was suspended for forty-five days and ordered to cease and desist from violating ORC 1707.19(A)(9) and OAC 1301:6-3-19(A)(19).
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