Timothy Edward Evans, the Chief Compliance Officer of IBN Financial Services Inc.,of Liverpool, New York, was sanctioned by the Financial Industry Regulatory Authority (FINRA) for failure to supervise the recommendation of alternative investments, including a non-traded real estate investment trust (REIT). Letter of Acceptance, Waiver, and Consent No. 2022076855801 (January 29, 2025).
According to the AWC, Evans and IBN Financial Services failed to supervise a registered representative’s recommendations to two = customers between January 2019 and February 2021. FINRA determined that Evans, who was responsible for reviewing and approving transactions, authorized sales that resulted in unsuitable investment concentrations for customers whose financial profiles did not align with the risk levels of the investments.
Evans approved five illiquid, non-traded alternative investments totaling $400,000 for a 71-year-old retired customer with a moderate risk tolerance and a net worth of $851,889, excluding primary residence. This approval resulted in a 47 percent concentration in speculative investments, according to the AWC.
Additionally, Evans authorized eleven illiquid investment transactions for a second customer, totaling $457,000, including $90,000 in a non-traded REIT. This second customer had an annual income of no more than $25,000 and a net worth of $587,438, excluding primary residence, with the approved transactions leading to a 77 percent concentration in speculative alternative investments.
Despite the red flags, Evans and IBN Financial Services did not conduct further reviews or assessments before approving these transactions, violating FINRA Rule 3110 and Rule 2010. Also, from June 30, 2020, through February 2021, IBN Financial Services willfully violated Rule 15l-1(a)(1) of the Securities Exchange Act of 1934 by failing to comply with Regulation Best Interest (Reg BI) requirements.
As a result of these regulatory violations, the regulator imposed a one-month suspension on Evans in all principal capacities, effective from February 18, 2025, through March 17, 2025. Additionally, he was fined $5,000. IBN Financial Services Inc. was also fined $50,000. Evans consented to these sanctions without admitting or denying the findings.
In addition to the regulatory action, FINRA Public Disclosure shows that Evans has a pending customer initiated investment related FINRA securities arbitration claim (FINRA Arbitration No. 24-00987). The claim, initiated on May 24, 2024, alleged the failure to supervise a registered representative between March 2021 and June 2022 in connection with the sale of promissory notes, with the customer seeking damages of $633,000. Evans denied all allegations, stating that the transactions in question were conducted outside of his direct period of association with the securities broker dealer and, therefore, he could not have been involved in the alleged sales practice violations.
Evans has been associated with IBN Financial Services Inc. since December 16, 2013.
