The Financial Industry Regulatory Authority (FINRA) suspended broker supervisor Douglas Brent Cartwright and fined him $5,000 for selling a promissory note to an investor outside the scope of his employment with Wells Fargo Investments, Inc. FINRA also found that Cartwright also failed to inform Wells Fargo of this outside business activity, a violation of FINRA regulations.
Cartwright did not contest the FINRA allegations, and accepted the findings, fine, and suspension.
FINRA alleges that in 2008, Cartwright recommended that a customer he had met through Wells Fargo invest $400,000 in Cartwright's personal real estate development company, Center Street Plaza, LLC.
FINRA found that Cartwright failed to provide notice to Wells Fargo of his business activities and investment sales activities outside the firm. Undisclosed outside business activities and private securities transactions are violations of NASD Rules 3030 and 3040, and the recently amended FINRA Rule 3270. FINRA found his activities violated both NASD Rules and Wells Fargo's policy, resulting in his eventual termination from Wells Fargo later that year.
When a broker engages in investment sales activities outside the scope of his associated FINRA-member firm, the broker's clients become susceptible to greater risk, generated not only by the increased personal interest a broker may have in completing the transaction at the expense of the customer's financial health, but by the fact that investing outside the scope of a FINRA-member firm also takes away certain compliance and supervisions protections that investors are guaranteed while investing within the FINRA-approved community.
If you invested with Douglas Brent Cartwright or another broker or representative who has recommended you participate in the broker's outside business activities, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.