December 16, 2020
The Financial Industry Regulatory Authority (FINRA) Department of Enforcement recently approved a Letter of Acceptance Waiver and Consent against Michael Magill, a former general securities representative associated with Foreside Fund Services, LLC (Foreside) in Portland, Maine, to resolve allegations that he participated in private securities transactions away from his firm.
In December 2018, Foreside allegedly began working for a private issuer to find potential investors for a principal-protected note offered by the issuer without providing written notice to Foreside. FINRA Department of Enforcement claims that Magill contacted and provided marketing materials to potential investors, explained the terms of the note, and ushered them to the issuer’s website to complete paperwork necessary to make the investment. Magill created a sense of urgency by stating that the investment would only be available for a short time and by offering higher interest rates for immediate investments.
As a result of Magill’s efforts, three individuals invested a total of $700,000. On top of the salary the issuer paid him, Magill earned $14,000 in commissions and a bonus for quick solicitation results.
However, FINRA asserts that Magill failed to conduct proper due diligence to understand the risks with this note and the issuer’s notes were not legitimate investments. In January 2019, the issuer stopped paying Magill completely, and by February 2019, federal agents shut down the private issuer’s offices. An executive of the private issuer later pled guilty to conspiracy to commit wire fraud and was sentenced to prison. The investors lost their entire investment.
By participating in private securities transactions without providing written notice to his member firm or receive approval for this activity, Magill violated FINRA 3280 and 2010. Without admitting or denying the allegations made against him by FINRA, Magill consented to a bar from associating with any FINRA member firm in any and all capacities.
According to his FINRA BrokerCheck report, Magill has been associated with FINRA member firms in eight different cities across the U.S. since obtaining his securities license in 1990, including New York City, Boston, Tucson, Denver, and San Rafael, San Francisco, and Newport Beach, California. Magill was associated with three member firms in that last ten years including: 1) Foreside from August 2017 to January 2019; 2) Crossroads Capital Distributors, LLC in Newport California from August 2016 to July 2017; and 3) Janus Distributors LLC in Denver, Colorado from December 2004 to December 2015. His BrokerCheck report does not reveal regulatory disclosures prior to this recent AWC.
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