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Investments - Private

A Case in Search of Some Common Sense

August 24, 2020

by Howard Haykin



On Sunday, Kellyanne Conway, a longtime adviser to Donald Trump, announced she was leaving the White House by end of August. Her attorney husband, George Conway, similarly announced that he was withdrawing from The Lincoln Project, an anti-Trump PAC he co-founded. Each was reacting to social media posts by their daughter, Claudia, 15, who expressed disgust that her mom was to be a speaker at the RNC (Republican National Convention). Claudia further tweeted:
my mother’s job ruined my life to begin with. heartbreaking that she continues to go down that path after years of watching her children suffer. selfish. it’s all about money and fame, ladies and gentlemen.”        
“as for my dad, politically, we agree on absolutely nothing. we just both happen to have common sense when it comes to our current president. stop “stanning.”  [‘stanning’, as in referring to mom’s overzealous or obsessive adoration of Trump]



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.


For his errant ways, the broker lost his job, was fined $7,500, and was suspended for 3 months.  



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.


Unfortunately neither of these scenarios played out in the above deal. So, of course we would be justified in concluding that the broker acted imprudently and without any measure of common sense. And one could say the broker appeared to get what he deserved. Which raises this question for investors: Would you be concerned or worried if this case involved YOUR OWN BROKER? 



[For further details, click on … FINRA Case #2018059200701.]