Thomas Anthony Rapp, of Morristown, New Jersey, a former stockbroker with M Holdings Securities Inc., has been fined $20,000.00 and suspended for 21 months from associating with any Financial Industry Regulatory Authority (FINRA) member because he engaged in an unauthorized outside business activity and private securities transactions or “selling away.” Letter of Acceptance, Waiver, and Consent No. 2022075493601 (April 8, 2025).
According to the AWC, FINRA launched an investigation into Rapp in response to a customer complaint. The regulator found that while Rapp was registered through M Holdings between June 2021 and July 2023, he helped establish and manage a private equity fund, serving as its Chief Executive Officer and managing partner. His responsibilities included managing the fund’s investments and responding to investor inquiries. Rapp also took part in raising capital for the fund by helping organize and promote the offering of limited partnership interests.
Even though Rapp’s activities were outside of his role at M Holdings, Rapp did not provide the firm with written notice, which is required under FINRA Rule 3270. This rule ensures that securities broker dealers are made aware of their representatives’ outside business activities in order to supervise for potential conflicts of interest. Not informing the firm also put him in violation of FINRA Rule 2010, which expects stockbrokers to maintain ethical business practices.
FINRA also determined that Rapp violated FINRA Rule 3280, which cover private securities transactions. During the same time frame, he took part in offering interests in the private equity fund to outside investors. He signed off on regulatory paperwork, communicated with potential investors, and helped facilitate purchases totaling more than $11,000,000.00 from around 15 individuals, some of whom were also his customers at M Holdings. Because these transactions were unrelated to his employment duties, they were classified as private securities transactions.
Hovany was associated with Wintrust Investments LLC in Vernon Hills, Illinois from November 21, 2008 to July 6, 2020.
