April 2011 FINRA Account Executive Enforcement Action:
Earnest Flowers III (CRD #2547561, Registered Representative, Laurelton, New York, formerly licensed with Aura Financial Services, 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, Flowers consented to the described sanction and to the entry of findings that in connection with the sale of investments in a film production company, Flowers made fraudulent misrepresentations and omitted to disclose material information. The findings stated that Flowers collected at least $92,000 from investors, falsely representing that he would use their funds to finance a film production business and promising exorbitant, guaranteed returns. The findings also stated that instead of investing the funds, Flowers misused $30,498 to repay other investors and pay for personal expenses without the investors’ knowledge, consent or authorization. The findings also included that Flowers made recommendations to a customer to invest in private placement offerings that were unsuitable in light of the customer’s financial situation, investment objective and financial needs. FINRA found that Flowers attempted to settle away customers’ complaints without his member firm’s knowledge or consent. FINRA also found that Flowers signed an attestation form for a firm acknowledging that email communications with the public must be sent through the firm’s email address and copied to the compliance department, but Flowers communicated with customers via unapproved, outside email accounts without his member firms’ knowledge or consent, and as a result of his outside communications, his April 2011 member firms were unable to review his emails to firm customers. In addition, FINRA determined that Flowers engaged in private securities transactions without providing prior written notice to, and receiving prior written approval from, his member firms. (FINRA Case #2009016956601).
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