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Michael Jackson: Securities America Advisor Suspended Over Discretion Allegations

A disciplinary action taken by the Financial Industry Regulatory Authority against former University Place, Washington broker and investment advisor Michael Jackson (CRD# 2784958) suspended him over allegations he exercised unauthorized discretion. A former representative of Securities America, Jacksonwas suspended for six months and fined $10,000.

According to a Letter of Acceptance, Waiver and Consent (No. 2017055684102) dated December 2018, Michael Jackson recommended in July 2016 that a customer open an account at a different broker-dealer firm, one that charged lower commissions, to recoup losses in her Securities America account by engaging in an aggressive options trading strategy. After the customer made a deposit in the account of $10,000 and gave Jackson her login credentials, he started placing orders in it. FINRA’s findings state that he “carried out forty-two options strategies comprising more than one hundred transactions” in the client’s new account between October 2016 and May 2017. FINRA states that he engaged in activities including the selection of options and placing of orders without communicating with her in advance, “even though she had not authorized him in writing to use discretion.” He also allegedly did not inform the new firm that he was associated with Securities America before he made the initial order in the new account, and similarly did not inform Securities America his trading activity in the new account, “even though he had recently attested to his firm” that he was not using clients’ credentials to access accounts or place trades. FINRA also states that he attested to the firm that he understood its prohibition of private securities transactions unless representatives receive firm approval.

FINRA’s findings go on to state that his trading in the outside account was profitable at the outset, but that his strategies began suffering losses “by mid-December 2016.” He allegedly began making trading orders “with increasing frequency, repeatedly closing positions shortly after opening” as the losses increase, and by May 2017 the customer’s new account’s value “had declined to $2.17… due partly to the cost of Jackson’s trading.” After the client complained to Securities America about his trades, FINRA began investigating his actions and the firm terminated its association with him. FINRA’s findings state that Jackson’s activities constituted violations of multiple securities industry rules, including NASD Rule 3050, FINRA Rule 3280, NASD Rule 2510, FINRA Rule 3260, FINRA Rule 2111, and FINRA Rule 2010. As a result of the foregoing alleged conduct, he was suspended from associating with any FINRA member in any capacity for six months. He was also ordered to pay a fine of $10,000.

Michael Jackson is not currently registered as a broker or investment advisor. His employment history includes Securities America in University Place, Washington, Brecek & Young Advisors, Donahue Securities, and Nationwide Investment Services Corporation. He currently holds no state licenses and has passed three securities industry qualification examinations.

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