James Johnson, a former broker at the Waltham Massachusetts-based Commonwealth Financial Network, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made negligent misrepresentations and omissions regarding a securities investment.
FINRA found that James Michael Johnson, of Richmond Virginia, discussed with his member firm customers a purchase of a 10% interest in West Virginia Farm Properties, LLC, a company formed to develop rural land into a residential neighborhood in West Virginia. Mr. Johnson misrepresented to the customers that all development costs had been covered; that the infrastructure for building the homes was already in place; that the houses were ready to be built on the property; and that the customers’ investment would allow the company to begin building homes immediately.
Further, FINRA found that Mr. Johnson gave the customers written materials, including a brochure, upon which he had handwritten “$5 to $9 million” to indicate the expected profit to the customers. Additionally, Mr. Johnson allegedly provided the customers another handwritten note stating that the company would have an immediate profit of $20 million, of which their portion would be $2 million, within three years.
According to FINRA, Mr. Johnson also omitted material facts which he was aware of regarding the investment. He omitted the fact that the company had sold the same interest to other investors for substantially less; that one of the company’s original investors had been indicted on Ponzi scheme charges; and that the company had $8.3 million in outstanding debt from two loans.
Due to the above-described prohibited conduct, FINRA assessed Mr. Johnson a deferred fine of $50,000 and suspended him from association with any FINRA member in any capacity for two years. The suspension is in effect from December 2, 2015 through December 6, 2017.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to misrepresentations and omissions by their broker can bring forth claims to recover damages against broker-dealers like Commonwealth Financial Network, which should consistently oversee its brokers’ activities in order to prevent the above described prohibited conduct.
Have you suffered losses in your Commonwealth Financial Network account due to misrepresentations and/or omissions by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Commonwealth Financial Network stockbrokers who may have made investment misrepresentations and caused investors losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.