Our Law Firm is investigating JPMorgan Securities in connection with the supervision of Benjamin Doyle Maleche (CRD No. 5573340) and allegations of “selling away.” “Selling away” occurs with a broker sells a product to a customer that is not approved by his broker-dealer.
On August 27, 2014, Maleche entered into a letter of Acceptance, Waiver and Consent (“AWC”) with FINRA, wherein he consented to a nine (9) month suspension and $5,000 fine. According to the AWC, “Between March 23, 2012 and April 11,2012 (the ”Relevant Period”), while a registered representative at JP Morgan, Maleche referred four Firm customers to TT, an investment company that offered investments in a fund composed of pre-IPO shares (the “Fund”). Maleche endorsed TT as a viable investment entity and recommended that these four customers invest in the Fund. In furtherance of Maleche’s recommendation and to facilitate the investments, Maleche emailed Customer CL on March 27, 2012 expressly endorsing the Fund. Maleche also provided Customer CL with the subscription agreement and power of attorney forms needed to purchase shares in the Fund.
JP Morgan was not aware that Maleche referred these four Firm customers to TT for the purpose of purchasing shares in the Fund: JP Morgan’s policies and procedures prohibit its registered representatives from participating in private securities transactions without prior written approval of the Firm.
During the Relevant Period, Customer CL invested $55,600, Customer JL invested $55,000, Customer WL invested $285,000 and Customer DS invested $140,000 in the Fund as a result of’ Maleche’s recommendations. Maleche never informed JP Morgan of his participation in the customers’ investments with TT.
NASD Conduct Rule 3040 prohibits an associated person from “participat[ing] in any manner in a private securities transaction” unless, prior to participating in the transaction, the associated person provides. ‘written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction.” A “private securities transaction” is defined in Rule 3040(e)(l) as “any securities transaction outside the regular course or scope of an associated person’s employment with a member…”
FINRA Rule 2010 provides that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.” Maleche violated NASD Rule 3040 and FINRA Rule 2010 because, during his employment with JP Morgan, he participated in private securities transactions by referring four Firm customers to invest in the Fund without the knowledge or consent of JP Morgan.”
If you invested with Benjamin Doyle Maleche, please contact our Law Firm, toll free, at 888-997-9956.