Arthur Hoffman (a/k/a Arthur Stewart Hoffman, “Art S. Hoffman”, CRD# 3193754) has been barred from the securities industry following his failure to provide documents and information in a Financial Industry Regulatory Authority (FINRA) investigation into his suspension from employment for violation of company policies. Hoffman allegedly sold to his clients investments in a cryptocurrency fund or similar investment without disclosing material facts. Silver Law Group has seen a rise in claims against financial advisors for improperly investing client’s money in various cryptocurrency or bitcoin related funds.
Hoffman began his securities career in 1999 and has been based in Glendale, Arizona for the past decade. Most recently, Hoffman was registered with Ameriprise Financial Services, LLC from 2016-2020 and prior to that, Hoffman worked for Wedbush Securities Inc. According to Hoffman’s CRD Report, published by FINRA, he was discharged from Ameriprise Financial Services LLC for “company policy violations related to outside business activities and private securities transactions.”
Action By The Securities & Exchange Commission (SEC)
The SEC filed a civil action against Hoffman on 2/24/22 related to previous activity disclosed in his CRD. In it, the SEC alleges:
- That Hoffman sold “membership units” to his clients but failed to disclose the financial conflicts of interest he had with them
- Failed to notify his firm (Ameriprise) of his outside business activities, and intentionally hid them from the firm
- Used a non-company email address to contact clients, against company policy
- Gave the firm false and misleading information to the firm about his outside business activities
- Gave the firm false information about client wire transfers from clients to the other company and convinced two clients not to discuss his involvement in the Membership units when contacted by his firm regarding the wire transfers.
This civil action is currently pending.
Customer Disputes And Other Disclosures On Hoffman’s FINRA Record – Cryptocurrency Investments
Of the eight disclosures on his record, Hoffman’s most recent are two customer disputes that are currently pending. Both disputes are centered on a previously noted entity called “Zima Digital Assets” or “Zima Digital Assets, LLC.”
- On 11/9/2021, a customer dispute indicated that Hoffman recommended investing $70K in Zima. The customer requests damages of $100,000.01
- On 4/15/2021, a customer dispute indicated that Hoffman “recommended an unsuitable outside investment” The customer requests damages of $358,183.00
Hoffman has two prior customer disputes disclosed on his CRD Report with related allegations. The first, from 2/16/2016, alleges fraud, misrepresentation, breach of fiduciary duties, and negligence. The customer requested damages of $1,000,000, and the claim was settled for $329,500.
The second dispute, filed on 6/22/2020, alleges that Hoffman recommended that the customer invest $172,688 in an entity called “Zima Global Ventures, LLC”, otherwise known as “Zima Digital Assets”. The dispute alleges that Zima is a Ponzi scheme that promised unrealistic investment returns. This claim was settled for $49,500.
Hoffman’s FINRA record also notes a bankruptcy in or around May 2020. These “financial” disclosures are important because investors should be wary of the fact that Hoffman was struggling in his personal financial affairs in recent months. This may have motivated Hoffman to recommend investments and investment strategies intended to financially benefit Hoffman to the detriment of unsuspecting investors.
Arthur Hoffman Failed To Respond To A FINRA Request For Documents And Information In Connection With A FINRA Investigation Into Hoffman’s Conduct Relating To Digital Assets
According to FINRA’s Letter of Acceptance, Waiver and Consent (AWC), FINRA opened an investigation into a disclosure by Hoffman’s employer that Hoffman had been suspended for company policy violations related to outside business activities and private securities transactions. In connection with that investigation, FINRA sent Hoffman a request for documents and information, which Hoffman failed to respond to.
This constitutes a violation of FINRA Rule 8210(c), which provides that “[n]o member or person shall fail to provide information or testimony” as well as Rule 2010, which requires all FINRA registrants to “observe high standards of commercial honor and just and equitable principles of trade.” Accordingly, FINRA issued a permanent bar from associating with any FINRA firm in any capacity.
Outside Business Activities And “Selling Away”- Cryptocurrency Frauds
The term “selling away” refers to when brokers recommend private investments that were never approved by their employing brokerage firms. The investments are “private” in the sense that they are typically not registered with state or federal securities regulators and thus not subject to the oversight necessary to detect and prevent fraud. Unfortunately, these transactions often end up supporting illicit or nonexistent business ventures, or the funds are simply stolen by the broker
Hoffman’s termination from Ameriprise Financial Services LLC was for violation of company policy involving private securities transactions and outside business activities. Generally, if a broker is affiliated with a business venture other than his employing brokerage firm, he or she must report that affiliation to the firm as an “Outside Business Activity”. That way, the firm can monitor and supervise the broker’s activities, especially if the broker is recommending that customers invest in that Outside Business Activity.
Did You Lose Money Investing With Arthur Hoffman And Zima?
If Arthur Hoffman recommended that you invest in Zima Global Ventures or Zima Digital Assets, or if you experienced other investment losses as a customer of Hoffman’s at Ameriprise Financial Services LLC, you may have a claim in FIRNA Arbitration to recover your losses.
Silver Law Group specializes in fighting for investors who lost money to brokers and financial advisors who took advantage of their positions as trusted financial professionals to defraud their clients of hard-earned savings. Silver Law Group operates on a contingency-fee basis, so the firm does not profit unless we recover funds for you. Contact Silver Law Group toll free at (800) 975-4345 or e-mail ssilver@silverlaw.com for a confidential consultation. Our attorneys represent investors nationwide in investment fraud disputes.