Jun Zhou of Chicago, Illinois submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in private transactions in violation of FINRA Rules 3280 and 2010.
In November 2015, Jun Zhou joined Leaders Group as an Investment Company and Variable Contracts Products Representative. According to FINRA, between April 2017 and August 2018, Zhou’s real estate company received $179,000 in compensation from 27 private securities transactions, with sales of $16,050,000 without notice or approval from her Firm. The findings stated that Zhou also formed a private real estate fund that was managed by her real estate company and filed a notice of exempt offering of securities with the Securities and Exchange Commission related to 12 transactions through which they sold $2,000,000 in membership interests. In addition to the findings, Leaders Group filed a form U5 on August 2, 2018, reporting that Zhou had been discharged for unauthorized outside business activity that involves a private securities transaction.
Rule 3280 prohibits any associated person from “participating in any manner in a private securities transaction” unless, prior to participating, the associated person provides “written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction.” A private securities transaction” is defined as “any securities transaction outside the regular course or scope of an associated person’s employment with a member,” while “selling compensation” is defined as “any compensation paid directly or indirectly from whatever source in connection with or as a result of a purchase or sale of a security.” In instances where the associated person may receive selling compensation, the member firm is required to either approve or disapprove the associated person’s participation in the proposed transaction. If the member disapproves, the associated person is prohibited from “participating in the transaction in any manner, directly or indirectly.”
Without admitting or denying FINRA’s findings, Jun Zhou consented to the sanctions and to the entry of findings and has been barred from association with any FINRA member in all capacities.
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 Leaders Group, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Leaders Group account due to private transactions by your broker? Was Jun Zhou 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 Leaders Group 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.