Northwestern Mutual Broker Fined for Outside Business Activities
Richard J. Rubin, Jr. of Stamford, Coonecticut, a registered representative for Northwestern Mutual, was fined $5,000 and suspended for fifteen days from association with any Financial Industry Regulatory Authority (FINRA) member firm in any and all capacities after consenting to findings that he engaged in an outside business activity without the written approval of his employer member firm. Letter of Acceptance, Waver and Consent, No. 2013038632601 (Nov. 2, 2015).
According to the AWC, after joining Northwestern, Rubin had requested permission from his firm to own real estate and engage in real estate related outside business activities with JRE, an entity in which Rubin was a partner. The AWC stated that Northwestern had provided Rubin with written permission to own real estate, which included rental properties, and even to engage in JRE’s business activities. However, his firm had specifically informed Rubin that he was not allowed to solicit other individuals to invest in real estate.
Notwithstanding his firm’s restriction, in May 2013, Rubin had solicited JM to invest $15,000 in a real estate deal in Tampa, FL. The AWC stated that the solicitation was outside of his capacity of a partner of JRE, was unrelated to the business activities of the entity, and was prohibited by Northwestern. Rubin reportedly received remuneration for his involvement in the real estate deal. FINRA found that Rubin had violated FINRA Rules 3270 and 2010 in this regard.
According to FINRA Rule 3270, FINRA’s position is that no registered person like Rubin may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his/her member firm, unless he/she is provided prior written notice to the member. Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
As a general matter, stockbrokers are only permitted to engage in the solicitation or sale of investments and investment related products approved by their firm. However, quite frequently, stockbrokers solicit, participate, or directly engage in the sale of typically unregistered securities or investments without the approval and outside of the auspices of their firm. These investments may take on many forms, and may include the recommendation of an outside money manager, or a hedge fund, which may sometimes turn out to be a Ponzi scheme. Sometimes these outside investments may include off-shore securities, insurance trusts, stocks or ownership interests in small businesses, startup ventures, corporate debentures, mortgage notes, private placements, promissory notes, oil & gas interests, real estate partnerships, pre-IPO shares, and a variety of other investments.
Public disclosure records reveal that Rubin has been subject to five disclosure incidents. On September 17, 2013, Rubin’s former firm, NMIS, LLC permitted Rubin to resign amid allegations of forging customer signatures on numerous non-variable life insurance documents. On October 4, 2013, Rubin settled a customer dispute in connection with the conduct in which his former employer, NMIS, permitted him to resign for. On October 25, 2013, another former firm, MML Investors Services, LLC discharged Rubin in connection with the internal review which occurred via NMIS, LLC. On November 8, 2013, Rubin settled a customer dispute for $7,461.85 after a complainant alleged that his signature was placed on various non-variable life insurance documents on March 4, 2013 without his knowledge or consent.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.