Private Placement and Direct Investment Fraud, Mismanagement and Misrepresentation FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
Gregory Allen Baldwin (CRD #1856003, Registered Principal, Hendersonville, North Carolina) was barred from association with any FINRA member in any capacity and ordered to pay $273,656.29, plus interest, in restitution to a customer. The sanctions were based on findings that Baldwin engaged in private securities transactions without providing his member firm prior written notice, that he made improper use of a customer’s securities and funds, and that he failed to respond to FINRA requests for information and testimony. The findings stated that Baldwin formed a limited partnership for which his adviser firm was the general partner and sold limited partnership interests to investors. The PPM for the fund and the subscription agreements reflected that Baldwin raised $2,940,000 through several private securities transactions for which he received selling compensation. Baldwin and his adviser firm were reimbursed for various expenses, and he received management fees in his capacity as general partner of the limited partnership. The fund completed wire transfers to Baldwin’s personal bank account totaling $156,925.53. Baldwin received wire transfers, totaling $6,100, to another account in his name. The fund also wired $75,000 to Baldwin’s personal investment account at his firm, and money from the fund’s bank account was used to pay Baldwin’s personal credit card expenditures of $48,231.32. The findings also stated that Baldwin’s firm did not give him oral or written permission to engage in any business activity relating to the fund. In fact, Baldwin signed annual attestations acknowledging the requirement to notify the firm prior to engaging in any private securities transaction away from the firm and provide details of the offering or placement, yet he failed to do so. The findings also included that Baldwin misused customers’ securities and funds, when contrary to the customer’s specific instructions, he caused the customer’s shares of stock to be transferred into his fund accounts at his firm, without the customer’s knowledge or authorization. Baldwin’s customer had instructed him to liquidate all of his shares of stock for an entity and to send him a check for the proceeds of the sale, which he agreed to do.
FINRA found that Baldwin subsequently informed the customer that he received $366,000 for the liquidation of his securities. When the customer requested the sale proceeds, Baldwin informed him that his monies had been invested in the fund; therefore, Baldwin could not disperse the funds because they were commingled with other investors’ monies. Baldwin sent him $50,000 after he expressed his dissatisfaction with the sale and his need for immediate funds. FINRA also found that when Baldwin caused the sale of the entity’s shares from his fund account, he retained the proceeds, which totaled $323,656.29, and failed to remit any additional monies to the customer. In addition, FINRA determined that Baldwin failed to respond to FINRA requests for information and documents and to appear for on-the-record testimony. (FINRA Case #2009019632401).