National investment loss lawyers KlaymanToskes reports David Geake (CRD# 3088891) of American Trust Investment Services and Ausdal Financial Partners was permanently barred from acting as a stockbroker in all capacities by FINRA, due to allegations that he participated in a private securities transaction by soliciting two elderly investors to pledge securities as collateral to guarantee a $2.5 million loan for a startup company.
Investors that suffered losses with David Richard Geake at American Trust Investment Services in Chicago, IL and/or at Ausdal Financial Partners in Northbrook, IL are encouraged to contact attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or lawrence@klaymantoskes.com to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
David Geake entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) with FINRA’s Department of Enforcement on July 10, 2023, disclosing that Geake consented to sanctions of a permanent bar from associating with any FINRA member in all capacities.
According to the AWC, the matter originated from FINRA’s review of a Form U5 filed by Ausdal Financial Partners in September 2018, which terminated Geake for engaging in an unreported private securities transaction.
FINRA found that “Prior to his association with Ausdal Financial Partners, Geake raised funds through the sale of common stock for Company A, a startup company developing technology to sell automotive parts online. Geake had also personally invested $100,000 in Company A and was a member of its Board of Directors.”
In November 2016, while registered as a representative of Ausdal Financial Partners, David Geake allegedly solicited two elderly investors (a husband and wife) to pledge approximately $15 million of securities as collateral for a $2.5 million loan from a bank on behalf of Company A. Geake reportedly also reassured the couple that their “risk of investment loss was minimal.”
The AWC states that “By April 2018, Company A had fully defaulted on the bank loan and closed its business. In 2018, the bank called for the loan to be paid in full. As a result, the couple were required to repay the entire $2.5 million bank loan with interest.” In soliciting his customers to pledge the securities and by facilitating the transaction, Geake participated in a private securities transaction. Additionally, FINRA found that on two separate occasions “Geake incorrectly attested to Ausdal Financial Partners on his annual compliance questionnaire that he had not participated in any private securities transactions.”
David Richard Geake was found in violation of FINRA Rules 3280 and 2010 for engaging in private securities transactions, or “selling away” from his firm, and providing unsuitable investment recommendations to his customers.
FINRA Rule 3280 defines a private securities transaction as “any securities transaction outside the regular course or scope of an associated person’s employment with a member.” FINRA Rule 2010 requires brokerage firms and their registered representatives to “observe high standards of commercial honor and just and equitable principles of trade.”
“Selling away” in private securities transactions occurs when a broker or investment advisor engages in selling an investment to a firm customer that is not offered by the executing brokerage firm, and without the approval of the brokerage firm. When brokers and financial advisors choose to offer their customers securities that are unapproved by their firm, they may be subject to FINRA sanctions.
If you suffered investment losses with David Geake, contact attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or lawrence@klaymantoskes.com to discuss recovery options. Our firm offers legal services on a contingency basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lawrence@klaymantoskes.com
www.klaymantoskes.com