Waddell Reed Broker Fined For Outside Business Activities

Carlos Velazquez of Elgin Illinois a stockbroker formerly employed by Waddell Reed has been fined $10,000.00 and suspended for eight months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he engaged in undisclosed outside business activities and falsified documentation to FINRA personnel. Letter of Acceptance Waiver and Consent No. 2016051054501 (May 30, 2018).

According to the AWC, prior to Velazquez’s association with Waddell Reed, he was agent of record and secretary for a bookkeeping and tax preparation business, Company A, where he provided bookkeeping and tax preparation services. The AWC stated that eight months following Velazquez’s association with Waddell Reed, he informed the firm about having been a passive investor in Company A. The AWC revealed that Velazquez made omissions to the firm concerning the scope and nature of Velazquez’s services to customers of Company A, and failed to be forthcoming concerning his role within Company A. The AWC stated that Velazquez violated FINRA Rules 2010 and 3270 based upon his failure to provide written notice of his outside business activity to Waddell & Reed and procure the firm’s approval.

The AWC further stated that when FINRA investigated Velazquez’s activities, Velazquez was asked to provide FINRA with an explanation as to why he did not provide Waddell Reed with complete disclosures concerning Company A. Velazquez apparently contended that his involvement was limited to unwinding Company A; however, Velazquez was an active owner and provided bookkeeping and tax preparation services to customers of Company A. FINRA concluded that Velazquez’s false representations were violative of FINRA Rule 2010.

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