Michael Heath Sanctioned for Personal E-mails, Communications in Violation of First Allied Securities Policies

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FINRA fined and suspended Michael Eugene Heath, formerly of First Allied Securities of Ladera Ranch, California, for using an unapproved, personal e-mail account to communicate with customers about investment and firm-related business, and for additionally creating performance summaries for his clients that failed to comply with FINRA standards on communications with the public.

AWC #2016048936601

Heath (CRD #2708198), who presently serves as a broker with Infinity Financial Services (Ladera Ranch), joined Securities America (Ladera Ranch) after his termination from First Allied in 2016 for failing to comply with the firm's email policy, only to be discharged from Securities America just two months later for failing to disclose the personal e-mail investigation at First Allied.

Since then, Heath worked at Western International Securities in Pasadena until August 2018, when he joined Infinity Financial.

The findings state that while associated with First Allied Securities, Heath regularly communicated with his clients through a personal e-mail account, sending and responding to more than 1,600 e-mails through the personal account, away from the firm, such that the firm was unable to monitor the e-mails nor store them for record-keeping and compliance purposes.

Furthermore, FINRA found that Heath failed to satisfy industry rule 2210(d)(1)(A)'s requirement that representatives "must provide a sound basis for evaluating the facts in regard to any particular security."

In other words, FINRA wrote that when Heath created his one-to-two page account performance summaries on Microsoft Excel for his clients regarding proposed investments, he failed to provide a sound basis for his customers to evaluate the facts of the referenced securities, namely because Heath's summaries failed to disclose certain distinctions and explanations, such as where an asset was held (e.g., at the firm vs away from the firm), its basis for valuations (and that some of the valuations themselves had not been verified), a depiction of how total return figures were calculated, and that the summaries were only intended for informational purposes.

Though FINRA concluded that Heath's account summaries appeared in face-to-face meetings with clients, it also stands to reason that if any broker were to create a noncompliant account performance summary or other deficient document and send this document to customers using an unapproved personal e-mail address, that broker's firm would have great difficulty in detecting the defect, and it would not be entered into the official record, making it all the more challenging for compliance personnel to discover and act on the red flag.

If you have invested with Southern California broker Michael Eugene Heath or with any broker or financial adviser who has provided you with summaries or other documents that failed to provide a sound basis for evaluating an investment's efficacy or suitability, or whose communications using personal e-mail away from firm oversight has led to losses or damages because of an unsuitable/risky investment or the incurrence of fees, commissions, sales charges, or other undisclosed expenses, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.