October 20, 2020
Former general securities representative Xerxes Mullan recently consented to a lengthy suspension from associating with member firms of the Financial Industry Regulatory Authority (FINRA) to resolve allegations of participating in private securities transactions without prior written approval from his member firm.
According to the Letter of Acceptance, Waiver and Consent (AWC) approved by FINRA Department of Enforcement on September 22, 2020, Mullan participated in private securities transactions involving approximately $6 million in total sales, without approval from Purshe Kaplan Sterling Investments, his associated brokerage firm at the time. Specifically, Mullan and another registered representative managed an offering and solicited approximately $3 million in capital investments for a registered investment advisor (RIA) from 16 investors. Although Mullan did not receive commissions from the sales of the securities, he was the CEO and majority shareholder of the RIA at the time of the offering between April and September 2017. Mullan then raised an additional $3 million from 20 investors for the RIA’s holding company from September 2018 to January 2019. Again, Mullan did not receive commissions, but he was the majority shareholder and the manager of the holding company.
FINRA asserts that although Mullan disclosed his role at the RIA to the firm in 2017, he failed to provide prior written notice to the firm regarding his participation in the private securities offerings and falsely certified on two annual compliance questionnaires that he was not involved in any private securities transactions.
Based on the foregoing, Mullan violated FINRA Rules 3280 and 2010. Without admitting or denying the allegations made against him, Mullen consented to a two-year suspension from associating with any FINRA member firms in any capacity and a $10,000 fine.
Mullan was associated with Purshe Kaplan Sterling Investments from March 2017 – June 2019, Merrill Lynch, Pierce, Fenner & Smith Incorporated from April 2003 to February 2017, and Goldman, Sachs & Co. briefly in October 2002. All firms are located in New York City.
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