Johan Pereira became involved with an outside business activity (OBA) which included compensation. As required, he sought approval from Wells Fargo and was granted permission. In his request, Pereira stated that he would not offer advice on securities, financial planning, or financing through this OBA.
Later, Pereira did become involved in activity that was outside of the description he gave to Wells Fargo. He was approached to assist one of the OBA customers in purchasing Bitcoin, buying it for the customer personally. By doing so, Pereira went outside of the description he gave to Wells Fargo regarding his involvement. He did not disclose this activity to Wells Fargo as required.
FINRA began an investigation into Pereira’s involvement in this OBA, requesting information from him on May 5, 2020, and May 28, 2020, and pursuant to FINRA Rule 8210 requiring him to comply. Pereira failed to supply this information or cooperate with FINRA staff, who then notified him of an impending suspension date, 8/17/2020, if he did not comply. Three days prior to the suspension date, Pereira responded in writing, producing some of the requested information.
As a result of failing to cooperate with FINRA and other factors, Johan Pereira was fined $10,000 and suspended for seven months from any association with any FINRA member in all capacities. His suspension began on 12/20/2021 and ends on 7/19/2022.
Outside Business Activities – CryptoCurrency Investments
About 45% of Americans have a “side hustle” in addition to their regular “day job.” Whether selling products on eBay or other online shops, writing books, walking dogs, working in a coffee shop, baking cakes, designing and building websites, or any type of consulting work, it’s not uncommon for people to do other work on the side of their “day job.” But when your “day job” is a stockbroker at a brokerage firm, chances are the “side hustle” will involve financial- or securities-related services. Things can quickly become complicated.
We’ve blogged before about brokers and investment advisors who have outside business activities, or OBAs. In many cases, these brokers have crossed the line between the “side hustle” and running a side-business competitor to their employer. Not all brokers are bakers, so they create a conflict of interest. This leads to problems for the broker and his or her brokerage clients, as well as the firm and the OBA company.
FINRA Rule 3270, which governs outside business activities, is designed to prevent representatives from engaging in business outside of the firm without approval. This includes any type of business, even if it isn’t of a financial nature, if it’s paid work of any type.
The idea is to ensure that the broker is putting the client’s needs first, and not attempting to steer them to outside investments that may or may not be good for the client. Called “selling away,” it can also mean selling things that are not vetted and approved by the firm for whom they work.
One of the questions a firm will consider is whether this OBA will interfere with the broker’s primary job at the firm. Another is whether the OBA will compromise the client’s assets, and if the broker’s OBA will look as if it’s part of the firm’s overall business.
As a client, you should also be aware of a broker’s outside business activities, and whether or not it will impact you and your investments.
Did You Invest In Bitcoin Or Other Cryptocurrency?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.