FINRA barred former Lincoln Financial Services Corp., LLC representative Jerry Dean McGlothlin of Laguna Hills, California for selling away, or engaging in an outside business activity without notifying via writing or obtaining permission from his employing firm, Lincoln Financial, to do so.
According to the investigation, McGlothlin's outside business activities were associated with the International Business Law Center, Inc. and Internet Business Law Services (IBLS) Online Education, Inc., both companies which used the same Irvine, CA address and telephone number as McGlothlin's branch office at Lincoln Financial.
Additionally, investigators discovered that McGlothlin owned a "significant portion" of both International Business Law Center and IBLS, holding officer positions at each company, serving as both President and Chief Financial Officer at both companies.
The investigation states that McGlothlin engaged in "selling away," by actively participating in the sale of Law Center and IBLS common stock, raising nearly $1 million over six years with Law Center and an additional $1+ million with IBLS without notifying Lincoln Financial of his activity.
FINRA alleges that after failing to notify Lincoln Financial of this outside business activity, McGlothlin repeatedly provided false answers to FINRA questions in regards to outside business activities and private securities transactions.
McClothin allegedly provided false answers 36 times. Meanwhile, Lincoln Financial's own firm policies and procedures prohibited employees from participating in such private securities transactions without first notifying and receiving permission from the firm in writing.
FINRA's Office of Hearing Officers barred McGlothlin in a default decision as McGlothlin failed to fully respond to FINRA requests for information and did not appear at the proceeding.
Selling away is a dangerous area of misconduct because when a broker sells securities in private transactions, not known or supervised by the broker's employing firm, the securities often carry massive amounts of risk and often are part of a fraudulent scheme. Selling away means that the brokerage firm, although responsible for the transactions according to the Calfiornia Code of Regulations, has not reviewed or approved the securities for sale. Ultimately, the high degree of risk is passed on to unsuspecting investors.
If you invested with Jerry Dean McGlothlin or any broker or firm who has engaged in private securities transactions and such transactions have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.