Scott Patrick Kozak of Highlands Ranch, Colorado submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was suspended for two years for allegedly engaging in private securities transactions, known also as selling away.
Between 2011 and 2014, while registered with Cetera Advisors LLC, Scott Kozak allegedly engaged in private securities transactions without written notice or approval from his member firm. According to FINRA, Mr. Kozak solicited Cetera customers and registered representatives to invest $1,166,000 in two companies’ securities. Mr. Kozak also invested his own money in the companies. Further, Mr. Kozak was found by FINRA to have solicited investments in promissory notes from seven Cetera customers, who collectively invested $380,000 in the promissory notes. NASD Rule 3040 prohibits associated persons from participating in any manner in a private securities transaction outside the regular course or scope of their employment without first providing written notice to the member firm. The written notice must describe in detail the proposed transaction and the person’s proposed role therein, and whether he has received or may receive selling compensation in connection with the transaction. A violation of NASD Rule 3040 is a violation of FINRA Rule 2010, which requires members and associated persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
Without admitting or denying FINRA’s findings, Scott Patrick Kozak consented to the sanctions, was assessed a deferred fine of $10,000 and has been suspended from association with any FINRA member for two years. The suspension is in effect from April 6, 2020 through April 5, 2022.
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 securities transactions, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Cetera Advisors, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Cetera Advisors account due to your stockbroker selling away from the firm? Was Scott Kozak 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 Cetera Advisors 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.