Tracy Neal Wengert from Mesa, Arizona, a stockbroker with Transamerica Financial Advisors, Inc., was permanently barred from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he had failed to comply with FINRA’s investigation into allegations against Wengert, including that he opened brokerage accounts outside of his firm on behalf of his firm’s customers and engaged in unsuitable trading. Letter of Acceptance, Waiver and Consent, No. 2015044289201 (Oct. 29, 2015). On January 30, 2015, Wengert was discharged by Transamerica in connection with such allegations.
According to the AWC, FINRA had begun to investigate allegations of misconduct by Wengert while he was associated with Transamerica. Wengert was reportedly alleged to have opened brokerage accounts outside of his firm on behalf of firm customers and proceeded to place unsuitable trades in his customers’ accounts.
FINRA, pursuant to Rule 8210, requested that Wengert provide copies of his personal tax returns for tax years 2011 through 2013, including the tax return itself. On June 15, 2015, according to the AWC, Wengert had requested an extension on his time to respond to FINRA’s requests. Wengert then retained counsel and eventually provided certain documents pertaining to FINRA’s requests, but failed to provide copies of Wengert’s tax returns as instructed to do so.
The AWC stated that FINRA made additional requests to retrieve the information, warning Wengert that he could be subject to sanctions for not complying. The AWC further stated that on September 23, 2015, Wengert’s counsel indicated to FINRA that Wengert would not be providing his tax returns or further cooperate with FINRA at any point in their investigation. FINRA found Wengert’s conduct to be violative of Rules 8210 and 2010, leading to his permanent bar.
FINRA Stockbrokers like Wengert 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 equitable principles of trade.
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, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Public disclosure records via FINRA’s BrokerCheck reveal that Wengert has been subject to seven disclosure incidents. On March 13, 2003, Wengert settled a customer dispute for $5,899.21 after a client alleged that the representative did not deliver a variable universal life insurance policy with purchase. On November 29, 2011, Wengert had entered into a financial compromise.
On December 30, 2014, Wengert became subject to a pending customer dispute, where customers are requesting damages of $732,037.24 after alleging that from December 2010 – January 2014, he breached his fiduciary duty to clients by misrepresenting investment strategies, experience, and needs. The clients allege that Wengert encouraged the clients to transfer their retirement funds from an account managed by an outside money manager to a brokerage account at a third-party broker dealer which Wengert would manage on a discretionary basis; that Wengert placed unsuitable and high risk trades resulting in substantial financial losses; that clients paid commissions to Wengert directly in addition to the commissions that were billed by the outside broker dealer for the trades executed by Wengert; and that Wengert mischaracterized losses on their tax returns. Wengert has also been subject to two additional customer disputes (pending), in which customers are alleging largely the same subject matter in the December 30, 2014 customer dispute.
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.
