FINRA Catches Wells Fargo Stockbroker Selling Away Cryptocurriencies
Ryan Matthew Davis of Mahwah New Jersey a stockbroker formerly employed by Wells Fargo Clearing Services LLC has been fined $15,000.00 and suspended for eighteen months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that Davis engaged in undisclosed outside business activities and private securities transactions and that he failed to be forthcoming with Wells Fargo in regard to his activities. Letter of Acceptance Waiver and Consent No. 2019061456701 (June 24, 2020).
According to the AWC, between April of 2015 and January of 2019, Davis took part in outside business activities which he failed to disclose to the securities broker dealer. Throughout that time at least six companies had been created by Davis. One of those companies entailed commodities futures trading and five of the companies concerned cryptocurrencies trading. The AWC stated that limited liability companies and a partnership had been formed and operated by Davis. Banking and investment trading accounts were established in those companies’ names.
The regulator also indicated that marketing materials for those entities were created and distributed by Davis to prospective investors. The stockbroker also took part in his companies’ selection of the cryptocurrencies to be purchased. FINRA found Davis’ failure to report these outside business activities to constitute the violation of FINRA Rules 2010 and 3270.
FINRA also stated that Davis undertook capital raising activities for companies in December of 2017. The regulator stated that $200,000.00 from six investors had been solicited and accumulated by Davis in return for membership interests in the LLCs or interests in the limited partnership that he created. The AWC indicated that those interests were securities which Davis solicited by establishing and disseminating marketing materials to clients. FINRA determined that Davis’ private securities transactions were violative of FINRA Rules 2010 and 3280.
The AWC stated that Wells Fargo was also falsely told by Davis that his outside businesses were not active and that there was no investor funding that had occurred. The securities broker dealer was also told that one of Davis’ LLCs was just a hypothetical enterprise. Davis subsequently admitted to Wells Fargo that the businesses were not just mockups but funded enterprises which were set up for cryptocurrency trading. FINRA determined that Davis’ activities were violative of FINRA Rule 2010.
Davis was discharged by Wells Fargo Clearing Services on January 4, 2019 supported by allegations of his unapproved cryptocurrency business.