According to a FINRA disciplinary action announcement, Jeffrey Dean Schrader (CRD #3092638, Philadelphia, Pennsylvania) recently submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity.
Without admitting or denying the allegations, Schrader consented to the sanction and to the entry of findings that despite his familiarity with his member firm’s WSPs concerning unapproved private securities transactions, and without providing any written notice to, or receiving written approval from the firm, Schrader sold or otherwise participated in the sale to investors of secured three-year corporate notes an entity issued. The findings stated that Schrader completed and signed his firm’s annual compliance certification, in which he certified that he received and read the firm’s WSPs. Schrader also failed to disclose his receipt of commissions to his firm at or about the time of payment. In connection with the investors’ transactions, Schrader received approximately $14,500 in commission payments from the entity and its affiliated companies, and an additional $97,100 from the entity and its affiliates labeled as commissions, fees and other remuneration.
The findings also stated that prior to soliciting and selling the notes, Schrader failed to conduct reasonable due diligence into the product. Schrader lacked an adequate and reasonable basis for making the note recommendation to the investors.The findings also included that in an annual certification, Schrader disclosed to the firm for the first time that he was engaged in an outside business activity selling life and disability insurance for the entity’s parent company and would be compensated by commission. However, in the annual certification, Schrader did not disclose to the firm that he was engaged in sales of the entity’s note, which, according to the private placement memorandum (PPM), was a security. When the firm confronted him about his participation in the sale of the note to the customers, Schrader falsely represented that he had engaged or participated in only one sale of the entity’s note. At that time, Schrader also provided the firm with copies of certain checks the entity or its holding company issued to him, and he falsely represented that the checks were commission payments Schrader received in connection with his approved outside life insurance business. These checks were merely part of the total commissions and fees Schrader received from the entity and/or its affiliated companies for participating in the sales of the notes. During the period, Schrader received a total of $84,000 in commission payments and $27,600 in fees or other compensation from the entity and/or its affiliated companies. FINRA found that Schrader provided false information to FINRA during an on-the-record interview concerning the number of transactions in which he was involved, the amount of selling compensation he actually received, and the solicited nature of the transaction.
For the full findings, see FINRA Case #2011029928701.
According to Schrader’s FINRA Broker Report, he was employed by Merrill Lynch from November 2005 through April 2009 and Western International Securities from March 2009 through February 2014.
The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group.
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