Former San Diego Registered Representative Consents to FINRA Bar to Resolve Allegations of Converting Customer Funds for Personal UseWednesday, February 26, 2020
In an Order Accepting Offer of Settlement released on February 18, 2020, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement settled their complaint alleging conversion of investor funds against former registered representative Martin Batstone.
The allegations made by FINRA in their October 1, 2019 Complaint occurred while Batstone was a associated with Independent Financial Group, LLC (IFG) in from January 2009 to April 2017. Batstone was also associated with Crown Capital Securities, L.P. from April 2017 to August 2018 and Newbridge Securities Corporation from November 2018 to May 2019. All firms are located in San Diego, California.
FINRA’s Complaint alleged that between November 2015 and August 2016, Batstone solicited $75,000 from two IFG customers to invest in a small limited liability company then transferred the funds to his personal bank account to use for his own expenditures. Batstone was introduced to this company in 2014 by a former rapper and disc jockey. The company purportedly provided brand management and product placement services for athletes and entertainers. For five years, Batstone assisted the company with marketing, capital raising, and managing at least two of its financial accounts. During this time period, the company had one client: a skateboarder and TV personality who hired the company to brand and distribute an energy drink he promoted.
Between November 2015 and August 2016, Batstone allegedly solicited investments to his brokerage clients. He allegedly told investors that their funds would be used for general operating costs and marketing and distribution of the company’s sole client’s energy drink. Batstone claimed that the investors could expect returns on their investments in five to seven years. Instead, Batstone allegedly transferred a total of $11,000 of customer funds intended to be invested in this company to his personal bank account without their knowledge or authorization.
Based on the foregoing, Batstone willfully violated Section 10(b) of the Securities Exchange Act and FINRA Rules 2150, 2020 and 2010 for converting customer funds. He also violated FINRA Rules 3280 and 2010 for failing to provide written notice to IFG of his participation in soliciting investments that constitutes private securities transactions. To date, the investors have received no return on their investment, or return of their principal investments in the company.
FINRA Department of Enforcement approved the Offer of Settlement and ordered that Batstone be barred from associating with any FINRA member in any capacity.
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