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Charles Edwin Taylor, Jodi Oyler Padgett and John Lodge Farmer all of Prescott Arizona and stockbrokers formerly registered with Royal Alliance Associates Inc. have been sanctioned by Financial Industry Regulatory Authority (FINRA) according to a FINRA Hearing Panel Decision containing findings that (1) Taylor, Padgett and Farmer engaged in outside business activities that had not been authorized by the firm and (2) Padgett and Farmer were not adequately supervised by Taylor to ensure that the two stockbrokers complied with outside business activities rules implemented by Royal Alliance Associates. Department of Enforcement v. Charles Edwin Taylor et al. Disciplinary Proceeding No. 2017053382401 (Aug. 22, 2019).

According to the Decision, throughout the time that Taylor was associated with Royal Alliance and its predecessors, Taylor referred customers to a third-party company, International Collector’s Association, to effect precious metal coins transactions for customers. Evidently, Taylor had been compensated by International Collector’s Association in return for making the referrals but his activities were actually disallowed under Royal Alliance policies. Since there had been no due diligence undertaken by the firm in regard to these precious metal coins, sales of those metals were prohibited. FINRA alleged that Taylor disregarded the firm’s policies and concealed his referral arrangement with ICA for years. The Decision stated that Padgett and Farmer subsequently engaged in these referral activities alongside Taylor.

Between 2011 and 2016, Taylor, Padgett and Farmer had been administered questionnaires by Royal Alliance which called upon them to attest whether they were compliant with the firm’s policies. When submitting answers to the questionnaires, no information was elicited from them regarding the precious metals transactions. FINRA also stated that there was no due diligence conducted by Taylor, Padgett or Farmer in regard to the precious metals purchased by customers of Royal Alliance even though the stockbrokers facilitated customers’ transactions. Taylor, Padgett and Farmer were instructed by Royal Alliance to cease and desist from engaging in the precious metals referrals when the securities broker dealer discovered their activities.

Between 1999 and August of 2016, a total of thirty-five referrals had been made to ICA by Taylor, the majority of which involved customers of Royal Alliance. Also, nine referrals had been made by Padgett and six were made by Farmer. The Decisions stated that $1,100,000.00 in precious metal transactions had been executed through those referrals. FINRA found that Taylor, Padgett, and Farmer violated FINRA Rules 2010 and 3270 for engaging in the unpermitted outside business activities.

The Decision also stated that Padgett and Farmer’s activities were not supervised by Taylor. Apparently, Taylor was responsible for supervising Padgett and Farmer since he was branch manager and because he specifically steered the two stockbrokers towards engaging in the activities. Taylor reportedly failed to have Padgett and Farmer disclose their referral arrangements to the firm; and he disregarded the firm’s restrictions on the precious metal sales by permitting the stockbrokers to engage in those referrals.

FINRA found Taylor’s conduct violative of FINRA Rules 2110, 3110(b) and 2010 as well as NASD Rules 2110 and 3010. He was fined $25,000.00 and suspended by FINRA for six months from associating with any FINRA member in any principal capacity, while Farmer was fined $6,000.00 and Padgett was fined $15,000.00.

FINRA Public Disclosure reveals that Taylor and Padgett have been referenced in a customer initiated investment related written complaint on March 18, 2016 in which the customer requested $42,120.00 in damages founded on allegations that misrepresentations had been made to the customer concerning exchange traded funds when Taylor and Padgett were employed by Royal Alliance.

The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.

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Guiliano Law Group, P.C.

Our practice is limited to the representation of investors. Over the last three decades, we have recovered more than a hundred million dollars for more than 1,000 injured investors from all over the United States and several foreign countries. We accept representation purely on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a confidential consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.

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