On March 9, 2021, the Financial Industry Regulatory Authority (FINRA) disclosed that former registered representative George Marshall Warner (Warner, CRD# 2300570), was barred from the securities industry. As set forth in a Letter of Acceptance, Waiver and Consent (AWC) in connection with an investigation by FINRA Enforcement concerning Warner’s “potential participation in undisclosed private securities transactions”, Warner’s failure to respond to FINRA Enforcement’s request for the production of certain information and documents constituted a violation of FINRA Rule 8210.

FINRA’s investigation was triggered around July 30, 2020, when Warner’s former employer, Chelsea Financial Services, filed an amended Form U5 after one of Warner’s former customers initiated a dispute with FINRA. Specifically, the customer arbitration concerned allegations that Warner had engaged in “selling away.” In response to FINRA Enforcement’s request for information and documents, Warner’s attorney indicated that his client would not produce “the requested information or documents at any time.”

Warner was first registered with FINRA in December 1992, and over the course of a nearly 25-year career was affiliated with numerous brokerage firms. Most recently, from September 2017 until his voluntary resignation in October 2019, he worked as a broker for Staten Island-headquartered Chelsea Financial Services. Prior to this, he was affiliated with Dominion Investor Services, Inc. and IFS Securities.

As disclosed through FINRA BrokerCheck, George Warner has been subject to two customer complaints, of which one matter resulted in a settlement of $225,000. As of the date of this writing, the other customer complaint, alleging damages of $100,000, remains pending. This pending dispute concerns allegations that Warner engaged in impermissible “selling away” activity.

In instances where a stockbroker sells or solicits the sale of investments not held or offered by the brokerage firm, then that representative has engaged in the impermissible practice of “selling away” from the firm’s list of approved financial products. Selling away is dangerous for customers because the investments being offered may not have been subject to proper due diligence, and even more troubling, may potentially be fraudulent in nature. Should a broker wish to consummate a private securities transaction, then he or she must first provide prior written notice to the brokerage firm regarding the contemplated transaction, which can then only occur upon the firm’s approval.

If the transaction proceeds without prior notice to the firm, or in contravention of the firm’s directives, then FINRA Rule 3280 has been violated. Furthermore, brokerage firms like Chelsea Financial have a duty to ensure that their registered representatives are adequately supervised, and if a broker is selling away investment products while affiliated with the firm, then the brokerage firm may well be held liable for investor losses due to the brokerage firm’s failure to adequately supervise its broker.

The attorneys at Giarrusso Law Group LLC have significant experience working with investors to resolve all manner of issues concerning investment losses, including losses suffered due to misconduct or negligence by a broker and/or brokerage firm. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost and confidential consultation.