- February 23, 2019
- Hornor Townsend & Kent
Thomas E. Sova is a former Financial Advisor at Hornor, Townsend & Kent, Inc. in Baton Rouge, LA. Thomas Sova has been in the securities industry since 1984.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on June 27, 2018, Hornor, Townsend & Kent, Inc. terminated Thomas Sova “for violation of firm policies and procedures regarding disclosure of outside business activities relating to the outside sale of an unapproved and unregistered security.” On January 31, 2019, FINRA sanctioned Thomas Sova with a suspension of five months, a $5,000 fine and disgorgement of commissions in connection with his “soliciting investors to purchase promissory notes relating to the Woodbridge Group of Companies (“Woodbridge”), a purported real estate investment fund” without providing prior notice to or obtaining approval from Hornor,
For a copy of the FINRA sanction, click http://www.finra.org/sites/default/files/fda_documents/2018058498401%20Thomas%20E.%20Sova%20CRD%20431135%20AWC%20va%20.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.
Separately, Thomas Sova has one pending customer complaint disclosed on his CRD alleging “the registered representative sold an unregistered security in May 2016.”
For a copy of the Thomas Sova CRD, click https://brokercheck.finra.org/individual/summary/431135
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