South Florida Arbitration & Litigation Lawyer Blog
Unauthorized Outside Business Activity and Selling Away Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
November, 2011:
Daniel Joseph Voccia II (CRD #2691802, Registered Principal, Calverton, New York) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Voccia consented to the described sanction and to the entry of findings that he was a brokerage partner with another registered representative, shared clients and commissions and collaborated on outside ventures, including a private company they formed. The findings stated that Voccia and his partner orally informed their member firm they were involved in an outside business activity relating to their company, and the firm gave oral approval with the understanding they would only solicit one firm customer; Voccia and his partner solicited other investors, including firm customers, without the firm’s knowledge and approval. The findings also stated that Voccia made misrepresentations and omissions of material fact when he told prospective investors that the company and its related companies had good chances of success and would be able to sustain themselves even though he had insufficient knowledge of the companies’ finances, and his representations were misleading because he focused on the potential benefits of investing in the company without providing adequate disclosure about the risks. The findings also included that Voccia engaged in capital raising for his company and his related companies; individuals invested approximately $6 million dollars during a five-year period. FINRA found that Voccia and his partner were able to sell investments without the firm’s knowledge because the investments were not held with their firm’s clearing firm but were held with firms that their firm allowed its brokers to use to maintain custody of illiquid investments such as their company. FINRA also found that Voccia did not provide the firm with written notice of any of the proposed offerings and did not inform the firm that he had received, or might receive, compensation for selling the offered securities. In addition, FINRA determined that the firm did not approve the private securities transactions, did not record them on its books and records and did not supervise Voccia’s participation in the transactions. Moreover, FINRA found that Voccia failed to disclose numerous outside business activities unrelated to his company without prompt written notice to his firm. Furthermore, FINRA found that Voccia failed to amend his Form U4 to disclose material information and failed to respond to FINRA requests for information, documents and to timely appear for testimony. (FINRA Case #2009017195203).