Date:

February 16, 2021

Type of alert:

FINRA AWC  

In a recent Letter of Acceptance, Waiver and Consent (AWC), the Financial Industry Regulatory Authority (FINRA) Department of Enforcement barred former registered representative Gary Hammond for violating securities rules by participating in over $1.6 million in private securities transactions without providing written notice to his associated member firm at the time—MSI Financial Services, Inc. in Charlotte, North Carolina. Hammond was associated with the firm from August 2000 to March 2017.

FINRA Department of Enforcement asserts in the AWC that Hammond participated in 14 private securities transactions totaling $1,638,000 involving investments in three limited liability companies controlled by his half-brother. Hammond allegedly participated in the transactions by referring customers to his half-brother, attending meetings to discuss the investments with his customers, and receiving compensation that generally equated to six percent of funds raised through his referrals. Ten of Hammond’s customers invested a total of $1,019,000 to two of the LLCs that were later revealed to be Ponzi schemes.

Hammond also allegedly made false statements on his firm’s annual compliance questionnaire that he was not participating in private securities transactions or received referral fees outside of the firm.

Based on the foregoing, Gary Hammond violated FINRA Rules 3280 and 2010. By signing the AWC, Hammond consents to a bar from association with any FINRA member firm in all capacities.

Hammond’s FINRA BrokerCheck report reveals that he was briefly associated with MML Investors Services, LLC and Hornor, Townsend & Kent, Inc. from March to May 2017 and August to December 2017, respectively. MML discharged Hammond following an internal review related to the handling of a customer complaint and selling away, in violation of company policy. His BrokerCheck report reveals numerous customer disputes that alleged unfair and deceptive trade practices and state securities fraud regarding his recommendations to invest in certain private securities. Settlement amounts range between $86,000 to nearly $1.2 million.

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