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WWW: Out to Lunch at this B&B (Outside Business Activity)
by Howard Haykin
Walter Olsson, a broker with 50 years' experience with essentially 2 firms, agreed to pay a $5K fine and serve a 4-month suspension to settle FINRA charges that he participated in an unapproved private securities transaction pertaining to a previously-approved outside business activity.
FINRA FINDINGS. Olsson owned a local inn with 2 other individuals - both of whom were customers of Raymond James. While the firm had approved Olsson’s outside business activity – i.e., his involvement with the inn – the firm prohibited him from involving any other firm customers with the inn.
Nevertheless, in June 2012, Olsson was involved with getting another Raymond James customer to invest in the inn - in this case a $260,000 promissory note. To close the transaction, Olsson: (i) discussed the note transaction with the customer; (ii) introduced the customer to a representative of the inn; and, (iii) directed another registered rep at Raymond James to liquidate $260,000 in funds from the customer's account at the Firm to be used for the investment. Olsson never informed the firm nor sought its approval for the note transaction.
The customer ultimately lost his investment, and his estate settled with Olsson on claims that he had engaged in misrepresentation.
FINANCIALISH TAKE AWAYS. Taking the facts as presented, this registered rep engaged in "misrepresentation" and "selling away" - and he could have been hit with a larger fine. Two factors probably played in his favor: he settled with the customer's estate and, after being U5'd bu Raymond James, Olsson probably 'retired' from the business.
This case addressed in this article was reported in FINRA Disciplinary Actions for February 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016052628601.