Steven Douglas Schisler, of Grass Valley, California, a stockbroker formerly registered with IFS Securities, has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to an Order Accepting Offer of Settlement. Disciplinary Proceeding No. 2018058718601 (January 31, 2022). FINRA found that Schisler engaged in nine separate sales practice violations, selling away and unsuitable investment recommendations.
According to the Order, Schisler had a retired couple invest $300,000.00 in a promissory note which was intended to finance a commercial property. FINRA states that Schisler made an unsuitable recommendation because of how the $300,000.00 consisted of the majority of the customer’s retirement assets, which they needed to pay down debt. The customers were also unsophisticated investors with few income sources in retirement.
Schisler did not perform due diligence required of him before making his investment recommendations. Had he done so, he would have learned that one of the partners who issued the note was barred for fraud. Schisler violated FINRA Rules 2010 and 2111 for making unsuitable recommendations.
FINRA states that Schisler’s involvement in the customers’ promissory note transaction occurred outside the scope of his activities. He was explicitly instructed by his employing securities broker dealer not to engage in any private securities transactions. Schisler’s selling away activities showed that he violated FINRA Rule 2010 and NASD Rule 3040.
FINRA states that the issuer of the note defaulted. One of the customers filed an investment related arbitration claim. Schisler failed to report this customer’s dispute even though he was repeatedly instructed by his employer to disclose it. Schisler violated FINRA Rules 2010 and 1122.
According to the Order, Schisler settled the dispute with the customer, but not before having the customer enter into an agreement to support his request for expungement. During an arbitration hearing on Schisler’s request for expungement, Schisler lied to the Arbitration Panel. FINRA contends that Schisler mischaracterized his involvement in the investment.
When Schisler testified in a FINRA investigation on February 19, 2020, he lied to the regulator by characterizing a finder’s fee as a personal loan. He falsely claimed that he did not know about the customers’ investment. Schisler violated FINRA Rules 2010 and 8210 for falsifying testimony.
The regulator also states that Schisler solicited a $50,000 loan from a different customer through a promissory note. This note was secured by a mortgaged property. The property was foreclosed upon after Schisler defaulted on the mortgage. Schisler never told the customer he defaulted or that the property was foreclosed upon. The regulator states that Schisler failed to repay the customer until October of 2020, years after the principal note was due. Schisler violated FINRA Rule 2010 in this regard.
FINRA Public Disclosure also shows that a customer filed an investment related civil action regarding Schisler’s activities in which the customer requested compensatory damages based upon accusations of breach of fiduciary duty, failure to return trust assets, and conversion relating to a real estate transaction while Schisler was registered with IFS Securities. Civil Action No. CU17-082183.
Schisler was associated with IFS Securities between June 1, 2012, and September 9, 2019.
