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Our law firm is investigating potential claims against FINRA broker-dealer Multi-Financial Securities n/k/a Cetera Advisors (“Cetera”) regarding the sale of Energae and I-Lenders investments by former Cetera broker Darrell Duane Smith (“Smith”).
On July 3, 2013, Smith entered into an Order and Consent to Order and Agreement Docket, Division Docket No. 79798, with the Iowa Insurance Division. According to the Order, Smith’s securities agent and insurance producer licenses were revoked and he was permanently barred from applying for these licenses. In addition to being barred, Smith was ordered to pay a civil penalty of $5,000. The July 2013 Order came after a Cease and Desist Order dated April 10, 2013 was issued by the Iowa Securities Division against Smith. The Cease and Desist Order was issued in connection with Smith’s sales of investments in Energae and I-Lenders. I-Lenders is also known as Interested Investors, LLC.
According to Smith’s securities license, he was the subject of an internal review at Cetera. His license states that “after recently receiving copies of letters written by [Smith] relating to investments in a limited partnership, [Cetera] is reviewing [Smith’s] business to determine whether he had any involvement in limited partnership investments away from the firm without first giving the Firm notice or obtaining the Firm’s approval.” This described conduct is also known as “selling away.” The limited partnership referred to may be either Energae or I-Lenders. In March of 2012, Smith was “permitted to resign [from Cetera] after a client alleged he signed a variable annuity application with the client’s consent, which is in violation of the firm’s policies.”
From February 2001 to March 2012, Smith was registered with Cetera. Under FINRA Rules, Cetera was obligated to properly supervise the activities of Smith during the time he was registered with the brokerage firm. Accordingly, Cetara may be liable for failing to supervise Smith’s activities while registered at the firm, and it could be held responsible for compensating customers of Smith for their losses.
If you have information relating to this investigation, please contact Steven D. Toskes or Jahan K. Manasseh of KlaymanToskes, toll free, at 888-997-9956.