Paul Anthony Akre, of Waukesha, Wisconsin, a stockbroker with Wells Fargo Advisors, LLC, was fined $15,000.00 and suspended for four months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in unauthorized outside business activities, a private securities transaction, and improper loans with customers. Letter of Acceptance, Waiver and Consent, No. 2013837829701 (May 11, 2016).
According to the AWC, from March through May 2010, Akre arranged for a serious of loans to be provided to customer SB, which totaled $325,000.00. Apparently, in March through May 2010, Akre had initially loaned the customer $75,000.00 via three checks to be drawn from the personal account of Akre. The AWC stated that on April 20, 2010, $200,000.00 in additional funds was lent by Akre to SB that was effected with a promissory note calling for SB’s repayment within one year.
Apparently, SB secured this loan via a membership interest in a company, PASB, LLC, which was formed to hold the collateral pledged by SB to make whole on the debt. The AWC stated that $67,000.00 in additional funds were lend to SB by Akre for the purpose of SB having funds to invest (along with Akre) in AT, a company in the environmental remediation business. The AWC stated that Akre never informed his firm, or received approval for, his lending arrangements with SB.
The AWC further stated that Akre lent $20,000.00 in funds to another individual, RC. Again, Akre never notified, nor received approval from his firm to make the lending arrangements. Akre also apparently lied about not providing funds to customers through lending arrangements when completing his 2011 compliance questionnaire. FINRA found that in connection with Akre’s loans to SB, he violated FINRA Rule 2370. With regard to Akre’s loans to RC, Akre was found to have violated FINRA Rule 3240 and 2010.
The AWC further indicated that during the period in which Akre engaged SB in the lending arrangements, Akre also participated in unauthorized outside business activities. Specifically, Akre’s employer called for Akre to submit his requests to engage in outside business activities through a written request for approval prior to engaging in such. FINRA found that Akre’s involvement with SB to create PASB, LLC, was an outside business activity. The AWC noted that Akre was not just a joint owner, but responsible for management.
FINRA further noted that Akre, along with individuals SB and PS, formed ABS Investors, LLC, to facilitate a joint investment in AT. The AWC stated that Akre received founder’s shares in the company after the company executed a subscription agreement. Apparently, Akre was aware of his duty to report his outside business activities to Wells Fargo, but failed to do so. The AWC noted that between June of 2010 through June 2013, Akre routinely attested that he had not been involved in outside business activities. FINRA found Akre’s conduct in this regard was violative of FINRA Rules 2010, 3270, and NASD Rule 3030.
Finally, FINRA found that Akre also failed to disclose outside personal investments to his firm. Specifically, Akre failed to disclose the 1,167 shares (securities) he received in connection with the $67,000.00 investment in AT. FINRA found that Akre’s failure to disclose his private securities transaction was violative of FINRA Rule 2010 and NASD Rule 3040. Public disclosure records found that on July 8, 2013, Wells Fargo permitted Akre’s resignation in connection with his aforementioned misconduct.
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