John Dale Ernst of Milwaukee, Wisconsin submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly engaging in unapproved private transactions in violation of FINRA Rules 3280 and 2010.
From January 4, 2011 through March 12, 2018, John Dale Ernst was registered with Foresters Equity Services as an Investment Company Products/Variable Contracts Representative. According to FINRA’s findings, John Dale Ernst engaged in unapproved private securities transactions totaling $509,000 in Woodbridge promissory notes to four investors, three of whom were customers of his firm. The findings stated that Ernst received $35,252 in commissions in connection with the transactions. In addition to those FINRA findings, Ernst allegedly stated on his annual compliance questionnaires for 2015, 2016, and 2017 that he had not sold promissory notes or participated in any private securities activities without approval from his firm.
FINRA Rule 3280(b) states that prior to participating in any private securities transaction, an associated person shall provide written notice to the member with which they are associated describing in detail the proposed transaction and their role therein and stating whether they have received or may receive selling compensation in connection with the transaction. A private securities transaction is defined generally as any securities transaction outside the regular scope of an associated person’s employment with a member. FINRA Rule 2010 requires associated persons, in the conduct of their business, to observe high standards of commercial honor and just and equitable principles of trade.
Without admitting or denying FINRA’s findings, John Dale Ernst was assessed a deferred fine of $5,000, ordered to pay a deferred disgorgement of $22,752 in commissions received and suspended from association with any FINRA member in all capacities. The suspension was in effect from April 15, 2019, through January 14, 2020.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from private transactions, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Foresters Equity Services, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Foresters Equity Services account due to unapproved private transactions by your broker? Was John Dale Ernst your stockbroker? 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 Foresters Equity Services stockbrokers who may have engaged in broker misconduct 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.