South Florida Arbitration & Litigation Lawyer Blog
Outside Business Activity and Unsuitable Investment FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
November, 2011:
Frank A. Gutta aka Fazel A. Gutta (CRD #1705545, Registered Representative, Plantation, Florida) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for two years. In light of Gutta’s financial status, no monetary sanction was imposed. Without admitting or denying the findings, Gutta consented to the described sanction and to the entry of findings that he formed a corporation for the business purpose of pooling funds to be used to finance investments in various small businesses, and he operated the company for more than four years without notice to his member firm. The findings stated that Gutta offered and sold company promissory notes to individuals, including some firm customers, for proceeds of approximately $2.9 million; the firm did not sponsor or approve the promissory notes, and Gutta did not provide written notice to, seek or obtain approval from, his firm prior to engaging in the offer and sale of the notes. The findings also stated that Gutta recommended the notes to a firm customer without having a reasonable basis to believe the investment was suitable for her; the customer invested a total of $235,000 in notes, which was inconsistent with her stated investment objective and risk tolerance. The suspension is in effect from September 19, 2011, through September 18, 2013. (FINRA Case #2009017447501).