Aaron R. Parthemer, a former financial advisor with Wells Fargo Advisors, LLC, was permanently barred from association with any FINRA member in any capacity after consenting to FINRA findings that he engaged in unapproved outside business activities, unlawful loans to customers, private securities transactions, false written responses to FINRA pursuant to 8210 requests, and false responses within compliance questionnaires. FINRA Letter of Acceptance, Waiver, and Consent No. 2011030405801 (Apr. 22, 2015).
According to the Letter of Acceptance, Waiver, and Consent, in 2009, Parthemer and partner, SK, formed a company, PKG, which was registered via Morgan Stanley and subsequently Wells Fargo. The AWC indicated that PKG would provide financial concierge services to certain professional athletes playing in the NFL and NBA.
According to the AWC, from June of 2009 through March of 2013, when Parthemer was associated with Morgan Stanley and then Wells Fargo, Parthemer had engaged in a minimum of 3 outside business activities despite not providing notice and generating approval from Morgan Stanley and Wells Fargo.
The AWC indicated that such outside business activities included Parthemer serving as a president and CEO of a Miami beach nightclub, CP, from June of 2009 through January of 2012, where the club was owned by several professional athletes who also invested with Parthemer in his capacity at Morgan Stanley and Wells Fargo. In another instance, in June of 2011, Parthemer incorporated AMI, a company which he used to fund AH, LLC – a company that promoted nightclubs. Finally, in September of 2011, Parthemer later agreed to use AMI for product placements and public relations for a brand of tequila in return for a compensation arrangement. FINRA found this conduct to be in violation of FINRA Rules 2010 and 3270, as well as NASD Conduct Rule 3030.
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.
The AWC indicated that from November of 2011 through January of 2012, at a time when Parthemer was associated with Wells Fargo, Parthemer had loaned nearly $400k to 3 athletes who owned nightclub CP in addition to other Wells Fargo customers, for purposes of addressing CP’s operational expenses. Wells Fargo, during this time, had prohibited loans of this nature as such individuals were not related to Parthemer. FINRA found this conduct to be violative of FINRA Rules 2010 and 3240.
The AWC further noted that Parthemer had engaged in a private securities transaction concerning GVC, which was an internet branding company being managed by one of his friends. Parthemer had referred his NFL and NBA clients to invest in GVC through such friend. The AWC indicated that Parthemer was able to get his clients to purchase roughly 3.08M of preferred stock in GVC, where he would facilitate the transactions through hosting presentations and assisting clients with the requisite documentation for investment. Morgan Stanley and Wells Fargo, according to the AWC, did not approve of these transactions. The AWC noted that Parthemer never sought the firms’ approval. Consequently, FINRA found this conduct to be in violation of FINRA Rule 2010 and NASD Conduct Rule 3040. Further, the AWC noted that Parthemer had falsely stated to both his firms that he had no participation in any outside business activities and private securities transactions, which FINRA found to be a violation of Rule 2010.
Finally, Parthemer was found by FINRA to have provided false documentation and information regarding FINRA requests, pursuant to Rule 8210. The AWC indicated that on March 23, 2012, in written response to FINRA’s requests that Parthemer explain his affiliation with AMI, Parthemer had claimed that AMI was never used for any other purpose than to take tax deductions associated with expenses incurred from marketing his broker/dealer business. FINRA found that Parthemer’s response (stating that the firm was nothing more than a corporate shell) was false, especially considering the aforementioned knowledge FINRA obtained regarding AMI. Parthemer, in November 15, 2012, admitted to lying to FINRA regarding the nature of the $50,000 check used for purposes of funding AH, LLC. FINRA found that Parthemer violated FINRA Rules 8210 and 2010 in this regard.
Public disclosure records via FINRA’s BrokerCheck reveal that Parthemer has been subject to 5 disclosure incidents, 3 of which involve customer disputes which are currently pending. On April 22, 2015, the same day in which FINRA accepted Parthemer’s AWC leading to Parthemer’s permanent bar, Wells Fargo Advisors, LLC had permitted him to resign. The 3 customer disputes which Parthemer have become subject to between May 13, 2015, and June 30, 2015, collectively involve customers requesting $5,764,846.00 in the aggregate after claiming that Parthemer had recommended investments that weren’t authorized by his firm(s).
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, Esq., 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.
