The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
February 26, 2021
GUEST BLOG: COVID-19's Impact on Financial Advisors / How the Pandemic is Changing the Way Advisors Work by Michael King of Michael King Associates
(BrokeAndBroker.com Blog)
(BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5716/michael-king-recruiter/
Prominent Wall Street recruiter Michael King knows that COVID has changed the way the industry works. In today's Guest Blog, King warns that, more than ever, advisors on the move will rely upon their firm's technology infrastructure when servicing clients. In this new age of virtual meetings and remote workforces, it is critical to understand how a potential, new employer meets the online demands of the ongoing pandemic and how such a firm is preparing for the post-pandemic landscape.
SEC Charges Individual for Engaging in Illegal Unregistered Offering (SEC Release)
https://www.sec.gov/litigation/litreleases/2021/lr25036.htm
https://www.sec.gov/litigation/litreleases/2021/lr25036.htm
In response to a Complaint filed in the United States District Court for the District of Colorado
https://www.sec.gov/litigation/complaints/2021/comp25036.pdf, Wiser Investments, Inc.'s Chief Executive Officer, Glen A. Stewart, consented to the entry of a judgment that, among other things, permanently enjoins him from violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act and Section 15(a)(1) of the Securities Exchange Act; and, further, orders him to pay disgorgement of $45,853 with prejudgment interest of $5,727 and a civil penalty of $25,000. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2021/comp25036.pdf, Wiser Investments, Inc.'s Chief Executive Officer, Glen A. Stewart, consented to the entry of a judgment that, among other things, permanently enjoins him from violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act and Section 15(a)(1) of the Securities Exchange Act; and, further, orders him to pay disgorgement of $45,853 with prejudgment interest of $5,727 and a civil penalty of $25,000. As alleged in part in the SEC Release:
[F]rom at least August 2017 through October 2019, Stewart raised approximately $558,867 through the offer and sale of convertible notes and stock issued by Wiser Investments and its successor entity Wiser Investments, Inc. to approximately 39 investors who he identified through his tax advisory company. In connection with these sales, Stewart allegedly received $45,853.50 in transaction-based compensation. In offering and selling the securities, Stewart allegedly, conducted sales meetings with prospective investors and advised them on the merits of the investment. The complaint alleges that at the time Stewart offered and sold Wiser securities, the offering was not registered with the Commission and was not exempt from registration, and Stewart was not registered as a broker or dealer with the Commission or associated with a registered broker-dealer.
SEC Issues Whistleblower Awards Totaling Over $1.7 Million (SEC Release)
https://www.sec.gov/news/press-release/2021-34
https://www.sec.gov/news/press-release/2021-34
The SEC issued two Orders Determining Whistleblower Award Claims:
- '34 Act Release No,. 91206; Whistleblower Award Proc. File No. 2021-29 ($900,000 Award)
- https://www.sec.gov/rules/other/2021/34-91206.pdf
- '34 Act Release No,. 91207; Whistleblower Award Proc. File No. 2021-30 ($800,000 Award)
- https://www.sec.gov/rules/other/2021/34-91207.pdf
As asserted in the SEC Release:
In the first order, the SEC awarded a whistleblower over $900,000 in connection with an enforcement action and a related action. The whistleblower provided significant evidence, including a critical declaration, that helped expedite an ongoing investigation and enabled the SEC to shut down an ongoing fraudulent scheme preying on retail investors.In the second order, the SEC awarded a whistleblower over $800,000 for providing important evidence of false and misleading statements made to investors, resulting in the return of millions to harmed investors. The whistleblower provided assistance to the staff by participating in an interview and producing documents.
https://www.finra.org/sites/default/files/fda_documents/2019061982001
%20Sean%20Daniel%20McDevitt%20CRD%202786216%20AWC%20va.pdf
%20Sean%20Daniel%20McDevitt%20CRD%202786216%20AWC%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Sean Daniel McDevitt submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Sean Daniel McDevitt was first registered in 1996, and by June 2015, he was registered with WoodRock Securities L.P. In accordance with the terms of the AWC, FINRA found that McDevitt violated NASD Rule 3040 and FINRA Rules 32801 and 2010, and the self regulator imposed upon him a $10,000 fine and a six-months suspension from associating with any FINRA member in any capacity. In part, the AWC alleges that:
From August 20, 2015 through June 9, 2016, McDevitt solicited investors to purchase promissory notes in SENSEI, LLC, a software platform company for which McDevitt served as chairman and CEO. McDevitt solicited four investors who purchased promissory notes on August 20, 2015, January 8, 2016, February 26, 2016, and June 9, 2016 for a total amount of $600,000. The investors were not customers of Woodrock. McDevitt signed the promissory notes on behalf of SENSEI, LLC. The promissory notes were securities and, in fact, stated on the document that they were securities.Woodrock prohibited its registered representatives from participating in private securities transactions without providing written notice to the firm. McDevitt did not provide written notice to Woodrock prior to participating in the promissory note securities transactions involving SENSEI. Respondent's failure is aggravated by the fact that he did not disclose he was engaged in private securities transactions on three attestations he provided to Woodrock.