Serrano entered into a formal “Advisor Agreement” with a financial public relations firm. The findings stated that the website issued press releases recommending specific securities to the public, with the releases implying that the recommendations were made by Serrano, whom they identified by name and CRD number as a registered person the website employed.
Serrano failed to provide written notice of this outside business activity to either of the member firms through which he was registered, and signed a disclosure document in which he specifically and falsely denied that he was engaging in any outside business activity. Serrano acknowledged in a letter to FINRA that he had failed to disclose his outside employment to his member firms and conceded in on-the-record testimony that he was obligated to disclose the outside activity to both firms.
DeWald participated in private securities transactions without first giving his member firm written notice of his intentions and receiving approval.
DeWald made unsuitable recommendations to customers given his complete failure to perform a reasonable investigation concerning the product and that, while reviewing the product information on the company’s website, he took its representations for face value and failed to independently verify those representations.
DeWald made negligent misrepresentations of material fact in connection with the sale of installment plan contracts; he misrepresented to customers that they could take charitable tax deductions in connection with their investments, which was not true. DeWald provided customers with sales materials containing misleading and oversimplified descriptions of the contracts, and failed to obtain a firm principal’s approval prior to their use.
DeWald failed to respond to FINRA requests for documents.
Vanderhoof established a corporation and a website to market an “equity repositioning strategy” to investors, with the strategy calling for investors to obtain a loan for equity in a home, through mortgage refinancing or a home equity line of credit, and invest the loan proceeds with the goal of earning more through the investments than the cost of the loan, but a prime purpose in marketing this strategy was to sell mutual funds to investors through a firm he founded.
Vanderhoof authored television advertisements that were false and misleading, and failed to provide a balanced discussion and disclose the name of the broker-dealer; and Vanderhoof failed to file the advertisements with FINRA’s Advertising Regulation department in violation of NASD Rule 2210(c)(2)(a) which required that advertisements concerning mutual funds be filed within 10 days of first use.
Vanderhoof designed and authored a website and made the publicly available website, which misleadingly failed to provide a balanced discussion of the risks associated with borrowing money through home equity loans to invest in securities, included false and misleading statements and claims and projected investment results, and was not filed with FINRA’s Advertising Regulation department.
Vanderhoof authored an information brochure, which the firm’s registered representatives sent to potential customers, that contained the same advertising content violations and was not filed with FINRA’s Advertising Regulation department. Vanderhoof approved the equity repositioning analysis for use with potential customers and caused it to be distributed to potential customers when the analysis failed to disclose the risks assumed when investors borrow money from their home to buy securities, contained statements and claims that were unwarranted or exaggerated, and made predictions or projections of investment performance.Vanderhoof failed to ensure adequate review of the equity repositioning sales materials and failed to ensure that the firm established written supervisory procedures regarding the suitability of equity repositioning recommendations.