The Financial Industry Regulatory Authority (FINRA) barred (AWC No. 20150454876-01) former PFS Investments, Inc. (PFS Investments) broker Malcolm J. Babin after the broker failed to respond to a letter from the regulator requesting information to aid their investigation. While BrokerCheck records kept by FINRA do not disclose the nature of the regulatory inquiry, in May 2015, Babin was permitted to resign from PFS Investments stating that the broker was terminated for 1) being involved in a misappropriation; 2) unlicensed security solicitation, and 3) an undisclosed outside business activity and potentially a private securities transaction – also referred to in the industry as selling away.
FINRA alleged,on July 7, 2015, FINRA was investigating allegations that Babin converted customer funds and engaged in undisclosed outside business activities. FINRA requested that Babin provide documents and information by July 14, 2015. The regulatory stated that they received an email from Babin acknowledging receipt of FINRA’s requests for documents but informed staff that he would not cooperate. Due to his lack of cooperation, FINRA barred Mr. Babin from the securities industry.
The conduct alleged against Mr. Babin constitutes possible “selling away” securities violations. In the industry the term selling away refers to when a financial advisor solicits investments in companies that are not pre-approved by the broker’s employing firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly supervise their employees in order to detect and prevent brokers from offering investments that are not approved and may not be suitable for their clients.
Investors who have suffered losses may be able recover their losses through FINRA arbitration. The attorneys at Colling Gilbert Wright & Carter are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and we are only compensated if you receive a monetary recovery. Please contact our firm for a free consultation.