FINRA Sanctions Sigma Stockbroker For Selling Away
Fredrick Martin Randhahn (also known as Frederick Randhahn and as Fred Randhahn) of Ogden Utah a stockbroker formerly employed by Sigma Financial Corporation has been fined $5,000.00 and suspended for nine months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by findings that Randhahn engaged in undisclosed and unapproved private securities transactions in which investors were sold promissory notes or other investments tied to Woodbridge Group of Companies LLC. Letter of Acceptance Waiver and Consent No. 2018059663501 (Nov. 14, 2019).
According to the AWC, between June of 2016 and September of 2017, private securities transactions had been executed by Randhahn without the stockbroker obtaining permission from Sigma Financial Corporation. Investors were solicited by Randhahn to purchase promissory notes that pertained to real-estate investment fund, Woodbridge Group of Companies, LLC. FINRA noted that a Chapter 11 bankruptcy petition had been filed by Woodbridge in December 2017 – which was after the promissory notes had been sold by Randhahn to customers. At least $625,000.00 in those notes were purchased by five investors – two holding accounts at the securities broker dealer. For Randhahn’s facilitation of those transactions, he received commissions totaling $33,167.67.
The AWC stated that following Woodbridge’s bankruptcy filing, its owner, Robert H. Shapiro, had been issued a final judgement which required a civil penalty to be paid by Shapiro and for him and Woodbridge to disgorge illicit gains for Woodbridge investments.
The AWC stated that throughout the period in which Randhahn sold away from Sigma Financial Corporation, the securities broker dealer maintained policies which called upon the stockbroker to, inter alia, get permission before engaging in any outside securities transactions. There was no point in which notification was provided by Randhahn, and there had been no approval provided to him regarding his promissory note sales. In fact, Sigma Financial Corporation specifically identified in its policies that stockbrokers including Randhahn were under an obligation to report any proposed outside business activity involving promissory note solicitations and sales prior to those transactions being effected.
In addition, Randhahn was administered a compliance questionnaire by Sigma Financial Corporation for his activities in 2016 and 2017. In completing both of those questionnaires, Randhahn indicated that he had not engaged in any private securities transactions. FINRA found Randhahn’s conduct violative of FINRA Rules 2010 and 3280.
FINRA Public Disclosure additionally confirms that Randhahn is the subject of a customer initiated investment related arbitration claim where the customer sought $400,000.00 in damages based upon allegations that in 2016 and in 2017, the customer had been solicited by Randhahn to purchase speculative and fraudulent Woodbridge Mortgage Investment products by Randhahn during the time that he was associated with Sigma Planning Corporation and Sigma Financial Corporation. FINRA Arbitration No. 18-03656 (Oct. 30, 2018).
Randhahn was discharged by Sigma Financial Corporation on August 24, 2018 founded on accusations that unapproved investments had been sold by him while he was employed by the securities broker dealer.