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A Case in Search of Some Common Sense
by Howard Haykin
AND TALKING ABOUT 'COMMON SENSE', … how about the Springdale, AZ-based broker with Cetera Advisor Networks who, along with a long-time friend and customer, was caught investing in a private securities transaction. The broker and his friend/customer each invested a modest $15,000 in a trucking company - after the broker was warned by his firm not to participate in the deal.
Specifically, after somehow learning that the broker was either participating in or thinking about participating in the trucking company investment, ”Cetera warned [the broker] that any such investment would constitute a private securities transaction that could result in his termination.” WHY? Because the deal was a securities transaction outside the course or scope of the broker’s employment with Cetera. Nevertheless, each man proceeded to invest. After that, the broker falsely denied making any investment and falsely disavowed any intent to pursue any investment.
THE ABSENCE OF SOME COMMON SENSE. One might rationalize a broker's participation in a private securities transactions under different circumstances, such as ... (i) when the broker's firm is 'totally in the dark' about a deal; or, (ii) when the broker's firm is aware of a deal, but the 'stakes are too high to pass up' - i.e., customers are investing serious money and the broker is looking at large commissions.
[For further details, click on … FINRA Case #2018059200701.]
