Former Lenexa, Kansas broker and investment adviser Douglas Elstun (CRD# 2338588) has been named in a pending SEC enforcement action...Read More
Michael Carter: FINRA Suspends Former Foresters Equity Advisor Over Woodbridge Note
A disciplinary action taken by the Financial Industry Regulatory Authority against former Henderson, Nevada broker and investment advisor Michael Carter (CRD# 2882478) suspended him over allegations he participated in undisclosed and unapproved private securities transactions. A former representative of Foresters Equity Services, Carter was fined $5,000 and suspended from acting as a broker for two months as a result of these findings.
According to a Letter of Acceptance, Waiver, and Consent (No. 2018059752401) signed in May 2019, Michael Carter participated in a private securities transaction constituting the $25,000 sale of a promissory note in October 2016 without disclosing the transaction to his firm or receiving its approval.
FINRA’s findings specifically state that in October 2016, Carter “solicited an investor to purchase a promissory note relating to the Woodbridge Group of Companies,” described as a “purported real estate investment fund.” He sold the investor a promissory note of $25,000, a transaction for which he received a commission of $1,250. FINRA’s findings note that his firm’s supervisory procedures required its representatives to seek approval of private securities transactions “including the offer of promissory notes,” and that Carter neither notified the firm of the transaction nor received its approval. FINRA’s findings also state that in a 2016 compliance questionnaire, he reported to the firm that he had not “participated in any private securities activities without first obtaining written approval,” and further that he had not engaged in the sale of any promissory notes. Per the AWC Letter, FINRA Rule 3280(b) requires associated persons to “provide written notice to the member with which they are associated describing in detail the proposed transaction and their role therein,” including whether they may receive selling compensation, prior to any private securities transaction. FINRA defines private securities transactions “generally as any securities transactions outside the regular scope” of a representative’s employment with a FINRA member firm.
FINRA’s findings also note that in December 2017, the Woodbridge Group of Companies filed a petition for Chapter 11 bankruptcy, and that in the same month Woodbridge was the subject of final judgments ordering it and its former owner to disgorge ill-gotten gains; the former owner was also ordered to pay a civil penalty.
As a result of the foregoing conduct, Michael Carter was ordered to pay a $5,000 fine and suspended from association with any FINRA member firm in all capacities for two months.
Michael Carter is not currently registered as a broker. His employment history includes Foresters Equity Services in Henderson, Nevada, Questar Capital Corporation, MML Investors Services, and Mutual of Omaha Investor Services. He has passed four securities industry qualification examinations and currently holds no state licenses.