As recently reported, former registered representative Dain Farrell Stokes (CRD# 2960801) has been completely barred from the securities industry by both FINRA Enforcement (effective December 30, 2019), as well as the SEC (effective June 25, 2020). The industry bar by the SEC and FINRA comes on the heels of an investigation by the New Hampshire Bureau of Securities Regulation, alleging that Mr. Stokes solicited at least two of his clients to invest $576,000 in a supposed African charity project. The charity was purportedly linked to singer-songwriter Taylor Swift and billionaire philanthropist Bill Gates.

As alleged by the New Hampshire Bureau of Securities Regulation (the Bureau), Mr. Stokes apparently solicited at least two of his clients to invest in the African charity upon the representation that the investments would generate a 20% return. In October 2019–after concluding there was no evidence to bolster Mr. Stokes’s claims that the charity was legitimate—the Bureau obtained a preliminary injunction and asset freeze against Mr. Stokes. As alleged by the Bureau, “On August 1, 2019, a client of [Dain Stokes] filed a police report alleging fraud related to a $201,000 investment project that [Stokes] classified as confidential. Client provided copies of cancelled checks, unsecured promissory notes, and text messages to the Police Department that corroborated the complaint.”

Mr. Stokes was a longtime securities industry professional, having initially entered the industry in March 1998. Most recently, from June 2009 until his termination on or about August 2019, Mr. Stokes was employed as a broker and investment adviser by LPL Financial LLC (LPL) in the firm’s Bedford, New Hampshire office. On November 14, 2019, the Bureau issued a Cease and Desist Order against Mr. Stokes, permanently barring him from holding any securities licensures in New Hampshire. Further, the Bureau ordered Mr. Stokes to pay restitution in the amount of $576,000, in addition to a $20,000 monetary fine to absorb the cost of its investigation.

Pursuant to applicable securities laws and FINRA rules, firms like LPL have an affirmative duty to monitor their employees. Under FINRA Rule 3010, a broker-dealer must “establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations….”

In instances where a broker engages in the unilateral and independent sale of securities, including promissory notes—through recommending an investment that is not on the brokerage firm’s approved list or otherwise offered through the broker’s firm—then that broker has engaged in “selling away.” FINRA Rule 3040 prohibits a registered representative from selling any security “away” from his or her employer. And in those instances where a broker is engaged in impermissible selling away, the brokerage firm employing that person may be held liable for its failure to supervise through, among other things, facilitating comprehensive periodic audits designed to flag and address possible selling-away transactions.

Investors who have suffered losses with Dain Farrell Stokes, or another financial advisor, may contact our office by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation to learn more about their legal rights. The attorneys at Giarrusso Law Group LLC have extensive experience with handling all manner of claims on behalf of investors who may have been victimized by securities fraud or related stockbroker or financial adviser misconduct.