July 21, 2021
George Louis McCaffrey III, a former NTB financial broker from 1989-2017, recently entered into an Acceptance, Waiver, and Consent (AWC) settlement agreement with FINRA agreeing to a bar from associating with any FINRA member in all capacities.
FINRA Rule 3280(b) prohibits an associated person from participating in any manner in a private securities transaction unless, prior to participating, the associated person provides written notice to his member firm describing in detail the proposed transaction and the associated person’s proposed role and stating whether he has received or may receive selling compensation in connection with the transaction. FINRA Rule 3280(e) defines a private securities transaction as any securities transaction outside the regular course or scope of an associated person’s employment with a member. A violation of FINRA Rule 3280 also constitutes a violation of FINRA Rule 2010.
On September 10, 2018, McCaffrey consented to findings that he violated FINRA Rules 3280 and 2010 by participating in twenty-two undisclosed private securities transactions in which nine investors, including one firm customer, purchased $1.775 million in debt and equity securities. During the course of the investigation, on October 23, 2017, Enforcement issued a request to McCaffrey, pursuant to FINRA Rule 8210, asking that he provide a “list of all outside business activities in which you engaged away from NTB.”
On November 9, 2017, McCaffrey’s then attorney responded that McCaffrey had “no other outside business activities other than his involvement in [the subject company].” McCaffrey did not disclose any other outside business activities in response to the October 23, 2017 FINRA 8210 Request. On June 7, 2018, during the prior FINRA investigation, McCaffrey, then pro se, produced a chart of individuals who invested in the subject company during the relevant period identified in FINRA’s request, detailing the amount of each investment and the compensation he received. McCaffrey did not identify any other private securities transactions in which he had participated other than the twenty-two transactions on the chart, which formed the basis of his prior AWC. McCaffrey, however, allegedly participated in private securities transactions in which two additional individuals, who were not NTB customers, purchased $170,000 of securities issued by the company that was the subject of his prior AWC.
According to FINRA McCaffrey never sought nor received NTB’s permission to participate in these private securities transactions. Additionally, contrary to his representations made in connection with his prior disciplinary action, in September 2017, McCaffrey participated in another $100,000 private securities transaction with an individual, who was not a NTB customer, involving a separate, but related company during his association with NTB. McCaffrey never sought nor received NTB’s permission to participate in this private securities transaction either. By providing false information to FINRA in connection with an investigation, McCaffrey violated FINRA Rules 8210 and 2010. Moreover, by participating in $270,000 of private securities transactions without prior written disclosure to and approval from his employer member firm, McCaffrey violated FINRA Rules 3280 and 2010 which resulted in his bar from FINRA.
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