South Florida Arbitration & Litigation Lawyer Blog
April 2011 FINRA Account Executive Enforcement Action:
Robert Lee Keys (CRD #720689, Registered Principal, Portland, Oregon, formerly licensed with Private Consulting Group, Inc.) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Keys consented to the described sanction and to the entry of findings that he made untrue statements and omissions in connection with the sale of a security; specifically, Keys recommended that a customer invest $1.1 million in a promissory note and represented to the customer that the promissory note was secured by $1.1 million in United States Treasury Bonds, when in fact, no such bonds existed. The findings stated that Keys provided wiring instructions to the customer in connection with the recommended purchase directing her to wire funds to the bank account of the issuing entity’s owner. The findings also stated that Keys failed to investigate and discover that no treasury bonds existed, and instead relied on information he was given during a conference call initiated by the issuer’s owner to an unknown individual who claimed to be a representative of a well-known financial institution, the purported current custodian of the bonds; and Keys failed to investigate whether the unknown individual was in fact the financial institution’s employee. The findings also included that at the time of Keys’ recommendation to the customer, he did not disclose the compensation, direct or indirect, that he expected to receive. FINRA found that the first time the customer discovered that any commission would be paid in connection with the sale of the note was when she received the note itself, delivered several weeks after she had wired the funds for the purchase; the note disclosed that a commission would be paid in connection with the note, but it erroneously stated that $50,000 would be paid to Keys’ member firm, and it did not disclose that Keys wholly owned the entity that received an additional $50,000. In addition, FINRA determined that Keys was responsible for establishing, maintaining and enforcing his firm’s supervisory control policies and procedures, but failed to implement reasonable supervisory controls when he failed to ensure that an individual at the firm who was senior to or other wise independent of himself supervised and reviewed his customer account activity. (FINRA Case #2009017125101)
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