FINRA suspended ex-Morgan Stanley and current Stifel, Nicolaus & Company (both of Roseville, CA) broker Richard Simon Botkin and fined him $15,000 for engaging in unapproved private securities transactions related to movie investments, conducted outside of the scope of his employment with and/or without the approval of Morgan Stanley.
The findings state that after receiving firm approval to participate in an outside business in the form of a documentary film production company called "Ride the Thunder Productions," Botkin (CRD #1571729) elected to begin selling shares in the production company, including $170,000 worth of shares to multiple Morgan Stanley customers, and another $75,000 in shares to two non-customers.
According to the investigation, Botkin advertised the Las Vegas, Nevada-based Ride the Thunder Productions to potential investors, while running the production company and failing to provide written notice to, or obtain approval from, Morgan Stanley for the $245,000 worth of investments in the outside business.
The regulator also cited Botkin for providing false answers in response to Morgan Stanley's annual compliance questionnaire regarding his participation in private securities transactions.
According to his BrokerCheck report, Morgan Stanley discharged Botkin on June 1, 2015 over concerns related to the Ride the Thunder project, including, "not adhering to limitations imposed on his participation by the firm, not fully disclosing his activity to the firm, and raising funds from clients and others."
Despite the termination after allegations, Stifel, Nicolaus & Company subsequently hired Botkin, who has been registered with that firm since June 17, 2015.
FINRA previously disciplined Botkin, then of Morgan Stanley's Folsom, CA branch, in 2011 for improperly sharing in a customer's losses. The report in that action included the finding that "Botkin...forgot about the account's automatic rebalancing feature [when he liquidated $100,000 of a customer's securities]" and that "Botkin mistakenly believed that he had forgotten to execute the customer's instructions." FINRA found that after discovering the losses, Botkin sent the customer a check for $15,000 and failed to notify the firm of his action.
Investing in a broker's movie venture—especially when the investment is not approved by a FINRA-member firm—can be risky business. In 2013, for instance, FINRA suspended former IndieVest Securities Inc. President and CCO Wade Harlow Bradley of Carlsbad for misconduct related to the solicitation of funding for "Knights of Badassdom," a company designated to finance the creation of a motion picture by the same name.
In 2015, Flintridge's Michelle Kenen Seward and Los Angeles' Dror Soref were arrested and charged with operating a $21 million Ponzi scheme to raise funds for several films under the name of Windsor Pictures LLC. Seward and Soref's alleged scheme targeted over 140 people, most of whom were retirees and elderly investors living in Los Angeles and Kern counties.
Like Botkin and Bradley, Dror Soref was registered with a FINRA-member firm, TransAmerica Financial Advisors, Inc. of Glendale, until that firm discharged him in February 2015 in connection with an injunction brought by the State of California Corporations Commissioner over allegations of misrepresentation and/or omissions of material fact in the sales of unqualified, non-exempt securities.
If you have invested with ex-Morgan Stanley and present Stifel, Nicolaus & Co. broker Richard Simon Botkin, or with any representative or financial adviser whose unauthorized solicitations or transactions related to investing in a motion picture or film production company has 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.