California Registered Representative Agrees to Sanctions to Resolve Allegations of Violating FINRA Rules by Conducting Business Outside of his Member Firm without Prior ApprovalTuesday, August 6, 2019
On July 18, 2019, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement recently approved a Letter of Acceptance, Waiver and Consent (AWC) against former registered representative Eric Savell for allegedly conducting outside business activity for which he was compensated without providing prior written notice or obtaining authorization from his member firm.
According to his FINRA BrokerCheck report, Savell has been associated with three FINRA member firms since registering as a representative in the securities industry. From August 2001 to April 2012, he was associated with Fidelity Brokerage Services in Sacramento, California. He then became registered with LPL Financial LLC in Granite Bay and Roseville, California from April 2012 to December 2014 and January 2016 to August 2017, respectively. Savell is not currently registered with a FINRA member firm.
According to the AWC, one of Savell’s customers expressed interest in taking on riskier investments. After Savell informed the customer that he likely could not provide the types of products she desired at LPL, he introduced her to a startup in the software development phase. Savell had already provided unpaid advice to the company and knew the CEO. As the customer’s interest in the startup piqued, Savell arranged a meeting with the startup’s CEO to facilitate a potential investment.
Shortly after this meeting, the customer liquidated her LPL accounts and invested $160,000 in the startup pursuant to a stock purchase agreement. Subsequently, from at least August 2016 to March 2017, Savell began working for the startup in increasingly important roles. Savell received compensation of $10,000 per month.
By failing to provide notice to LPL of his participation in the customer’s investment or his compensated roles at the startup, FINRA asserts that Savell violated FINRA Rule 3280 by participating in a private securities transaction and FINRA Rule 3270 by engaging in outside business activity. By virtue of those violations, he also violated FINRA Rule 2010.
Without admitting or denying the allegations made against him by FINRA, Savell consented to a five-month suspension in all capacities and a $10,000 fine.
Oftentimes brokerage firms can be held liable for the brokers’ misconduct if they failed to supervise them while registered at the firm. If you lost money due to broker misconduct, you may be able to recover from your broker or his or her member firm. Since 1998, the experienced attorneys at ChapmanAlbin LLC have been fighting for victims of investment fraud and broker misconduct. Call us today at 1-877-410-8172 for a free consultation.