Brief Background On Jeffrey D. Stanga
In August 2014, Jeffrey D. Stanga made his debut in the securities market by joining FMN Capital Corporation. In October 2014, he joined FMN Capital and became a General Securities Representative (GSR) with FINRA. Stanga is currently associated with FMN Capital, and as such, he has registered with FINRA as a GSR.
Report On Jeffrey D. Stanga
This case began in December 2017 when an outside client of Jeffrey D. Stanga’s member firm filed an arbitration Statement of Claim against him for alleged wrongdoing relating to investments.
Stanga Omitted Key Details About His Extracurricular Activities
According to FINRA Rule 3270, “[n]o registered person may be an employee, independent contractor, sole proprietor, officer, director, or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm,” unless the registered person first gives written notice to the member, in such form as is specified by the member. It is also a violation of FINRA Rule 2010 to act in a way that is contrary to Rule 3270.
Before joining FMN Capital in July 2014, Stanga ran a residential real estate flipping business called Company A, where he sold membership units in a private placement offering from February through June of that year. Jeffrey D. Stanga gave FMN Capital written notice of Company A on his Form U4, describing his involvement as an “investor, gives advice/opinions on buying/fixing/selling residential homes,” but he failed to fully disclose his role as “manager,” and that Company A was an investment-related business, as required by FINRA Rule 3270.
As a result, the Respondent violated FINRA Rules 3270 and 2010.
Stanga Taken Part in Unauthorized Private Securities Deals
Before engaging in a private securities transaction, an employee of a FINRA member firm must give written notice to the firm “describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction,” per FINRA Rule 3280 and its predecessor, NASD Rule 3040.
Securities transactions that occur “outside the regular course or scope of an associated person’s employment with a member,” as defined by FINRA Rule 3280, and that involve securities that are not registered with the Securities and Exchange Commission are considered private securities transactions.
There is a direct correlation between FINRA Rule 2010 and NASD Rule 3040 and FINRA Rule 3280.
Jeffrey D. Stanga formerly worked at Company B, a real estate agency, where he marketed promissory notes to investors. Stanga, after becoming registered with FMN Capital, facilitated the renewals of the Company B promissory notes he offered to investors between March 2015 and March 2017 for a total of eight private securities transactions for $1,160,000.
Stanga acted as an intermediary between four investors (including one of the firm’s customers) and Company B to renew their promissory notes. Stanga informed the investors of the option to renew their promissory notes, examined draft documents, negotiated interest rates, and arranged for the investors to send their signed promissory notes to Company B. Jeffrey D. Stanga made $28,359 in referral fees from these unpublicized stock deals.
Stanga did not comply with NASD Rule 3040 and FINRA Rule 3280 by providing written notice to FMN Capital and obtaining written permission from FMN Capital before engaging in these private securities transactions.
For actions before September 21, 2015, Respondent violated NASD Rule 3040; for actions on or after that date, Respondent violated FINRA Rule 3280; and for both dates, Respondent violated FINRA Rule 2010.
Sanctions, Penalties, and Repercussions
- a ban on working with any FINRA member in any capacity for 12 months
- a $10,000 fine
- a $28,359 disgorgement with interest (shown below).
Upon receiving notice that this AWC has been accepted and that the monetary sanction is due and payable, the Respondent agrees to pay the monetary fine. Respondent has sent an Election of Payment form detailing how he intends to pay the fine.
Respondent expressly and freely waives any claim of inability to pay the monetary penalties imposed in this matter, both at the time of execution of this AWC and at any time thereafter.
FINRA is entitled to $28,359 in disgorgement of ill-gotten gains from April 17, 2015, until the date this AWC is accepted by the National Adjudicatory Council (NAC), plus interest at the rate outlined in Section 6621(a)(2) of the Internal Revenue Code, 26 U.S.C. 6621. Within 120 days of the date of the notice of acceptance of the AWC, disgorgement payment is due.
Jeffrey D. Stanga Review
Stanga violated FINRA Rules 3270 and 2010 by withholding information about his outside business operations between October 2014 and December 2017. Jeffrey D. Stanga also engaged in private securities transactions between March 2015 and March 2017 without providing the requisite written notice to, or receiving written approval from, FMN Capital, in violation of NASD Rules 3040 and FINRA Rules 3280 and 2010.
Financial Advisor Scam Warning Signs (Infographic).
Victims of Jeffrey D. Stanga: Seek Assistance
If money was lost due to misrepresentation, an inappropriate investment, or inappropriate advice from Jeffrey D. Stanga, you may be entitled to compensation. Then you can seek redress in court. In this field, fraud, malpractice, and neglect of duty cannot be tolerated. If you discover that your financial advisor or brokerage business is violating FINRA’s rules and regulations, you should report them immediately.
Financial advisers must offer the best investments and investment plans for their customers, as required by law and regulation. Their advice should be tailored to the client’s specific objectives and requirements. The brokerage firm that employs financial advisers also has a regulatory and legal obligation to monitor and supervise the activities of its Financial advisers. They should check whether or not the financial advisor is being manipulative or favors one investing strategy over another. The client or customer may be entitled to a complete or partial recovery of losses if the financial advisor and/or the brokerage firm breaches certain duties.
When making recommendations about investments or investment strategies, financial advisors should do so with their client’s best interests in mind. For an advisor’s recommendations to meet the standard of “reasonable basis suitability,” they must conduct a thorough assessment of the potential benefits and drawbacks of the investments and/or strategies they recommend.
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