Donna Kay Beers of Dallas, Texas, a registered representative with Titan Securities of Addison Texas (CRD No. 131392), was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that she failed to cooperate with a FINRA investigation into allegations that Beers had engaged in an undisclosed outside business activity and misused funds. Letter of Acceptance, Waiver and Consent, No. 2014040397202 (Oct. 29, 2015).
According to the AWC, on April 30, 2014, Titan had filed an amended Uniform Termination Notice for Securities Industry Registration (“Form U5”) which disclosed that Beers was named as a respondent in a Statement of Claim filed with FINRA. The amended Form U5 stated that Beers had recommended an investment into an LLC which was memorialized by a promissory note, where Beers did not make good on the terms of the promissory note. The Form U5, according to the AWC, further stated that Beers’ conduct occurred without any knowledge from Titan, and that the claimant was never a client of Titan either.
In connection with the U5 amendment, FINRA had launched an investigation, pursuant to Rule 8210. On September 21, 2015, FINRA had sent Beers a request for her to appear and provide testimony. The AWC stated that on September 21, 2015, Beers had contacted FINRA via telephone and e-mail, where she acknowledged FINRA’s request but indicated that she would not be cooperating with the investigation at any point. FINRA found Beers’ conduct to be in violation of Rules 8210 and 2010, leading to her permanent bar.
FINRA registered representatives like Beers 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 just and equitable principles of trade.
This is not the first time that Beers has been subject to discipline in relation to her conduct. Public disclosure records via FINRA’s BrokerCheck reveal that in July 2013, the Arizona Corporation Commission, Securities Division, found that Beers had failed to disclose material facts related to her involvement with and her relationship to the private placements and direct participation programs that she had recommended to investors. The Securities Division held that Beers had engaged in dishonest and unethical conduct by recommending unsuitable securities.
The Securities Division also found that Beers had engaged in fraudulent conduct by offering and selling to investors’ interests in private placements that happened to be illiquid risky securities which were designed for investors who could withstand total loss of their investment, notwithstanding the fact that Beers informed investors that their money would be invested safely and conservatively. The AWC reported that Beers’ Arizona securities salesman registration was revoked; that Beers received a cease and desist order for violating the Arizona Securities Act and Investment Management Act; and Beers was ordered to pay restitution in the amount of $86,815 and an administrative penalty of $15,000.
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.
Firms and individuals, quite obviously, are prohibited from unauthorized use or borrowing of a customer’s funds or securities, forgery, non-disclosure or misstatement of material facts, and manipulations and various deceptions. These activities are also subject to the civil and criminal laws and sanctions of federal and state governments.
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.