On November 1, 2017, the Financial Industry Regulatory Authority (“FINRA”) disclosed that registered representative Masood “Mike” Husain Azad (“Mike Azad”) has been barred from the securities industry following a FINRA enforcement proceeding. Specifically, without admitting or denying FINRA’s findings, “[A]zad consented to the sanction and to the entry of findings that he failed to provide FINRA requested documents and information in connection with its investigation into allegations of misconduct by Azad while associated with his member firm… the allegations included that Azad participated in an unapproved private securities transaction by soliciting investments and/or directly investing in an electronic data security company and engaged in outside business activities involving the company….”
Publicly available information through FINRA indicates that Mike Azad (CRD# 4798445) worked in the securities industry from August 2004 – June 2017. During this time frame, Mike Azad was affiliated with the following brokerage firms: Voya Financial Advisors, Inc. (CRD# 2882) (2004-2015) and, most recently, First Allied Securities, Inc. (“First Allied”) (CRD# 32444) (2015-2017). According to FINRA BrokerCheck, Mr. Azad was discharged from his employment with First Allied on May 19, 2017, concerning allegations of violating firm policy “[r]elating to borrowing money from clients, engaging in an unapproved private securities transaction and outside business activity.”
Brokerage firms like First Allied have a duty to ensure that their registered representatives are adequately supervised. In this regard, brokerage firms must take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In those instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.
“Selling away” occurs when a broker or financial advisor sells an investment to a client that is not included in the client’s account or among the investment products offered by the firm. Selling away is often associated with a broker’s other (“outside”) business activities. Such private securities often include investments in private placements, closely-held private companies, limited partnerships, certain real estate investments, as well as promissory notes.
In the event that a financial advisor wishes to consummate a private securities transaction, then he or she must first provide the firm with prior written notice, detailing the contemplated transaction. Such a transaction must first be approved by the firm. In the event that the transaction is not approved by the firm, then the broker cannot participate in the transaction. If the broker fails to notify the firm, in the first instance, or proceeds with an unauthorized transaction in derogation of the firm’s order, then selling away has occurred, in direct violation of FINRA Rule 3280.
The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving broker misconduct, including selling away, in addition to claims against brokerage firms for their failure to supervise. Investors may be able to recover their losses in FINRA arbitration. Investors who wish to discuss a possible claim may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at email@example.com for a no-cost, confidential consultation.