While at Paulson Investment, A customer filed a dispute against Gheith on 4/13/2017, alleging fraud, negligent representations, negligence and unjust enrichment. The client requested damages of $1M, and the claim was settled for $165,000. Gheith responded that this claim was withdrawn and the claim settled by the firm without any financial contribution from him.
Paulson then discharged Gheith on 08/11/2017 for this customer-submitted arbitration, along with “violations of firm WSPs, failure to provide honest answers on annual questionnaires, violations of FINRA Rule 3280.”
While Gheith was employed with Paulson, he was involved with two other brokers in two private placement offerings that claimed exemption from registration under Rule 506 of Regulation D of the Securities Act of 1933. He was initially skeptical because this was not a Paulson-sanctioned project, and understood that it constituted “selling away,” or the sale of investments from elsewhere.
Between April of 2015 and March of 2016, Ahmed Gheith contacted four of his customers to discuss this investment in Belize as a possible investment and referred them to the two other brokers to discuss the investment. The four customers eventually invested $3.5 million in the project, and Gheith was paid $93,165 in compensation for his efforts.
After FINRA’s investigation, Gheith was suspended for 12 months, fined $10,000, and ordered to pay $31,055 in disgorgement. His suspension ended on 5/6/2019, and everything was paid in full on 6/5/2020.
While at Noble Capital, Gheith engaged in general solicitation of private placements, and claimed exemption under Rule 506 of Regulation D. Under the “safe harbor” clause, Ghieth could only contact 35 non-accredited investors, and not use “general solicitation” advertising to market these investments. Gheith had no prior relationship with any of the investors. Out of 40 prospects, four invested in these private placements. Gheith’s actions contravened Section 5 of the Securities Act of 1933 and therefore violated FINRA Rule 2010, so he did not qualify for the exemption.
FINRA sanctioned Gheith with a fine of $7,500 and a one-month suspension, which ended on 2/16/2023. In the broker comment of this entry in his CRD, Gheith stated that he believed contacting the clients was permissible and settled the arbitration to move forward.
Did You Invest With Ahmed Gheith?
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