Did Financial Advisor Timothy “Nathaniel” Darnell Recommend First Liberty Promissory Notes?

• September 9, 2025
• Bankers Life Securities
• Uncategorized

Broker’s History

Timothy Nathaniel Darnell (“Nathanial Daniel”) (CRD#: 173962) is a dually registered financial advisor and investment advisor with Bankers Life Securities, Inc. in Atlanta, GA. He entered the securities industry in 2016 and has worked for Bankers Life for the entirety of his career in financial services.  Nathaniel Darnell is also an insurance salesman and appointed agent with Bankers Life’s insurance subsidiary.

Allegations of Misconduct

The Wolper Law Firm is currently representing clients who were sold promissory notes and loan participation agreements issued by First Liberty Building & Loan, LLC (“First Liberty”), a Ponzi scheme, which is currently being pursued by the Securities and Exchange Commission (“SEC”).  A copy of the Complaint is attached hereto:  https://www.sec.gov/files/litigation/complaints/2025/comp-pr-2025-98.pdf.

While the Wolper Law Firm emphasizes that all allegations are unproven at this time, it has begun filing FINRA arbitration cases against Bankers Life Securities for the losses incurred by our clients in First Liberty as a result of recommendations made by Nathaniel Darnell. Each of the disputed recommendations were made by Nathaniel Darnell in his capacity as the investors’ Financial Advisor.  In some instances, Nathaniel Darnell facilitated the transfer of money from the Bankers Life brokerage accounts directly to First Liberty.

Among other things, investors were told the following:

• First Liberty securities paid a fixed income stream that investors could rely upon;
• First Liberty had never defaulted on a payment obligation to investors;
• First Liberty provided a “guaranteed” return of principal;
• First Liberty securities were stable sources of retirement income; and
• First Liberty securities were fully collateralized so that investor money was protected

Nathaniel Darnell further represented to investors that he was friendly with the Frost family, which operated First Liberty.

As it turns out, Nathaniel Darnell may have engaged in the practice of “selling away” when recommending that clients invest in First Liberty.  The Financial Industry Regulatory Authority (FINRA) and the SEC strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not approved by the brokerage firm with which they are employed. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.

FINRA Rule 3270, titled “Outside Business Activities of Registered Persons,” provides:

No 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 he or she has provided prior written notice to the member, in such form as specified by the member. Passive investments and activities subject to the requirements of Rule 3280 shall be exempted from this requirement.

In addition, FINRA Rule 3280 provides:

No person associated with a member shall participate in any manner in a private securities transaction except in accordance with the requirements of this Rule.

Prior to participating in any private securities transaction, an associated person shall provide written notice to the member with which he is associated 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; provided however that, in the case of a series of related transactions in which no selling compensation has been or will be received, an associated person may provide a single written notice.

(c) Transactions for Compensation

(1) In the case of a transaction in which an associated person has received or may receive selling compensation, a member which has received notice pursuant to paragraph (b) shall advise the associated person in writing stating whether the member:

(A) approves the person’s participation in the proposed transaction; or

(B) disapproves the person’s participation in the proposed transaction.

(2) If the member approves a person’s participation in a transaction pursuant to paragraph (c)(1), the transaction shall be recorded on the books and records of the member and the member shall supervise the person’s participation in the transaction as if the transaction were executed on behalf of the member.

(3) If the member disapproves a person’s participation pursuant to paragraph (c)(1), the person shall not participate in the transaction in any manner, directly or indirectly.

(d) Transactions Not for Compensation

In the case of a transaction or a series of related transactions in which an associated person has not and will not receive any selling compensation, a member which has received notice pursuant to paragraph (b) shall provide the associated person prompt written acknowledgment of said notice and may, at its discretion, require the person to adhere to specified conditions in connection with his participation in the transaction.

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.  Brokerage firms may be held responsible for this misconduct in the event they knew or should have known through appropriate supervision that their registered representative was engaging in this type of conduct.

The Allegations Against First Liberty

As set forth above, First Liberty turned out to be a Ponzi scheme.  According to the SEC, between 2014-2025, First Liberty and Edwin Frost raised $140 million from approximately 300 investors across the country by selling loan participation agreements and promissory notes that offered investment returns, ranging from 8% to 18%.  These loans were represented to be funding for “short term” bridge loans to small businesses with high interest rates.  In some instances, these loans were said to be backed by the Small Business Administration.

Initially, First Liberty and Edwin Frost limited the sale of the loan participation agreements and promissory notes to “friends and family.”  However, beginning in 2024, they engaged in general solicitation efforts to offer the investment opportunity to the public.  The SEC has alleged that Edwin Frost knowingly misrepresented the nature and success of the bridge loans and further represented that they had never experienced a default.  In reality, many of the bridge loans were in default, which compromised the asset pool that could be used to repay investors.

It is alleged that, by 2021, First Liberty was operating as a Ponzi scheme with approximately 80% of interest and principal payments to investors being made from new investor funds.  As additional bridge loans went it to default, the ability to legitimately repay investors was further compromised.  It is now believed that a significant portion of the $140 million raised has been completely lost.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. Matt Wolper can be reached directly at (754)-551-7388 or by email at mwolper@wolperlawfirm.com.