Former MSI Financial and MML Investors Services Broker Floyd Powell Barred by FINRA for Allegedly Selling $3.49 Million of Unregistered Woodbridge Promissory Notes
Floyd Powell is a former Financial Advisor at MSI Financial Services from 1992 to 2017, then MML Investors Services from 2017 to 2018, both in Albertville, AL.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on February 13, 2019, FINRA sanctioned Floyd Powell by barring him from the industry in any capacity for engaging in “undisclosed and unapproved private securities transactions totaling approximately $3.49 million” of Woodbridge Group promissory notes. Separately, Floyd Powell has four pending customer disputes alleging the sale of unregistered securities.
For a copy of the FINRA sanction, click http://www.finra.org/sites/default/files/fda_documents/2018058504901%20Floyd%20E.%20Powell%20CRD%202220029%20AWC%20jm.pdf
Unapproved private securities transactions are referred to in the industry as “selling away.” FINRA strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.
The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.
For years, the Woodbridge Group of Companies operated a ponzi scheme in which it sold (through outside financial professionals) promissory notes allegedly backed by mortgages. The investment program turned out to be a $1.2 billion ponzi scheme and Woodbridge’s principal, Robert Shapiro, is currently under criminal indictment.
According to the SEC’s complaint filed against Woodbridge, the Woodbridge business model was to borrow money from investors in exchange for promissory notes, maturing usually in 12 or 18 months. The notes had an annual interest rate of 5% to 8% payable monthly. The investors’ money was supposed to be issued to lenders in the form of securitized mortgages, but rarely was, according to the SEC. .
In December 2016, Woodbridge declared bankruptcy.
For a copy of the Floyd Powel CRD, click https://brokercheck.finra.org/individual/summary/2220029
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