FINRA suspended former Royal Alliance Associates (RAA) and present Independent Financial Group (IFG) principal Charles Edwin Taylor and fined him $25,000 for engaging in an outside business activity and failing to supervise subordinate brokers Jodi Oyler Padgett and John Lodge Farmer, also fining Padgett and Farmer (both of whom joined Taylor in the RAA-to-IFG switch) for their participation in the prohibited outside business activity based in Prescott, Arizona.
Investigators found that Taylor had referring customers to an outside precious metal sales firm for over 30 years, despite Royal Alliance's written procedures that prohibited representatives from participating in any precious metal sales, and that Taylor eventually enlisted Padget and Farmer into the undisclosed activity, with all three taking part in the referral process and profiting from this illicit activity for years.
OHO Decision #2017053382401 states that broker and supervisor Charles Taylor (CRD #443066) referred investors, including Royal Alliance customers, to the precious metals and bullion coin dealer International Collector's Association (ICA), receiving referral fees as a result. Royal Alliance wrote in a letter to clients that it shared no relationship with ICA, and stated that RAA had performed no due diligence on any precious metals investments.
Investigators found that Taylor continued referring customers to ICA for well over 30 years, predating his modern association with Royal Alliance, and continued to do so after registering with RAA, despite the firm's written procedures that prohibited its representatives from participating in any precious metal sales.
More recently, Taylor purportedly recruited Royal Alliance brokers Jodi Padget (CRD #1828918) and John Farmer (CRD #5354041), also of RAA's Prescott, AZ branch, to participate in the undisclosed outside referrals business. Padgett purportedly participated in the conduct for over 16 years, with Farmer joining in for at least four years.
FINRA wrote that Taylor, Padget, and Farmer did not inform RAA of this outside business (which was prohibited pursuant to firm policy) nor of the fact that they received compensation in the form of referral fees for referring customers to the outside dealer ICA.
Because of his role as a firm principal, FINRA also charged Taylor with failing to supervise subordinate brokers Padgett and Farmer. FINRA wrote that as a principal, Taylor would have received additional supervisory procedures material clearly indicating Royal Alliance's policies against precious metal sales.
According to FINRA, all three registered reps—Taylor, Padgett, and Farmer—still work out of the same branch office in Prescott Arizona, which is now affiliated with Independent Financial Group (IFG).
OHO wrote in its findings why its penalties may appear lenient relative to what FINRA called "significant" misconduct that spanned at least 16 years and involved over $1.1 million in customer investments: "We are also concerned about how suspensions might affect Respondents' new firm and its ability to service its clients, given that the office has only a few associated persons and Padgett and Taylor serve as its only principal."
If you have invested with former Royal Alliance Associates representatives and present Independent Financial Group brokers Charles Taylor, Jodi Padgett, and John Farmer of RAA and IFG's Prescott, Arizona branch, or with any RAA stockbrokers or investment advisers who unsuitably recommended or referred you to a precious metals dealer such as ICA despite RAA or another firm's outright prohibition on precious metal sales or similarly unapproved outside business activities, resulting in losses or other harm to your financial interests, please call our experienced FINRA arbitration attorneys at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.