Neal Charles Moon, and Natalie E. Fogiel Moon, of Dallas, Texas, stockbrokers formerly registered with Waddell & Reed, have been sanctioned by Financial Industry Regulatory Authority (FINRA) pursuant to an Office of Hearing Officers Order Accepting Offer of Settlement containing findings that the Moons, inter alia, engaged in private securities transactions. Department of Enforcement v. Moon et al., No. 2015046926801 (April 4, 2017). Specifically, Natalie Moon has been fined $5,000.00 and suspended twelve months from associating with any FINRA member in any capacity, and Neil Moon has been permanently barred by FINRA in all capacities.

According to the Order, between February 2012 and August 2015, Neal Charles Moon helped effect nine private securities transactions; and Natalie Moon helped effect six. In sum, a total of $2,640,000.00 in customers’ funds had been invested in the securities transactions. The Order revealed that the Moons failed to apprise Waddell and Reed regarding the private securities transactions before the Moons effected them. As a result, FINRA found that the Moons’ conduct was violative of FINRA Rules 2010 and NASD Rule 3040.

The Order stated that in 2012, Neal Moon partook in private securities transactions concerning an entity, CCBRAU – which had been formed to gather customer funds for the purposes of investing in Hoffbrau Steaks. Additionally, on or around 2013, Neal Moon apparently helped effect private securities transactions regarding Total Operating Investments 1, which was designed to fund an entity, Total Operating LLC, which established and provided maintenance services for natural gas pipelines. The Order further revealed that in April 2015, NMN Boxx Holdings, LLC, had been formed via Moon in order to pool customers’ monies for purposes of an investment in BOXX Technologies, in which the entity sold engineers, researchers and analysts various computer systems and work stations.

According to the Order, FINRA personnel had been lied to by Neal Moon during the period in which Moon had been questioned about his facilitation of private securities transactions. Apparently, within Waddell and Reed annual compliance certifications, Neal Moon made false representations to his firm, in which he claimed to have not partaken in private securities transactions. Specifically, Moon reportedly admitted to having lied to investigators in his firm about customers effecting withdrawals from investment accounts for purposes of funding a legal action regarding customers’ foreign properties. As a result, FINRA found that Neal Moon’s conduct was violative of FINRA Rule 2010.

FINRA Public Disclosure reveals that on April 10, 2014, a customer initiated investment related written complaint regarding Neal Moon’s activities was settled for $16,929.19 in damages, based upon allegations that Moon, while associated with Waddell & Reed, Inc., misrepresented the gains of a variable annuity to a customer, and made omissions of facts concerning a managed allocation portfolio’s contingent deferred sales charges. Neal Moon’s registration with Waddell & Reed, Inc. was terminated on September 18, 2015, based upon allegations that he admitted to having participated in private securities transactions.

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