Forrest Jones (Forrest Andrew Jones, CRD# 4880765) is a former registered broker and investment advisor whose last known employer was Merrill, Lynch, Pierce, Fenner & Smith Incorporated (CRD#:7691) of Conroe, TX. His previous employers include Fortune Financial Services, Inc. (CRD#:42150) of Montgomery, TX, McNally Financial Services Corporation (CRD#:121196) of The Woodlands, TX, and MetLife Securities Inc. (CRD#:14251) of Houston, TX. He has been in the industry since 2005.
The US Securities and Exchange Commission (SEC) began an investigation into Jones’ business practices on 6/24/2020. The agency began investigating these allegations involving omission and misrepresentations in the offerings of private placements, including promissory notes. On 5/13/21, the SEC then filed its complaint against Jones, along with Knight Nguyen Investments, Christopher Knight Lopez and his brother, Jayson Lopez after raising at least $3.7 million from retail investors and advisory clients in at least five fraudulent securities offerings.
Many of the investors were older and inexperienced. Jones and the Lopez brothers promised them solid investments with guaranteed high returns. However, the company, Jones, and the Lopez brothers recommended to and sold the investors very high-risk products that failed to meet the firm’s own criteria for investments. Furthermore, these investments were owned, controlled and/or associated with the Lopez brothers, who made multiple omissions and misstatements about the potential for the investments. The Lopez brothers also misappropriated and misused some of the investor funds and produced falsified financial statements for the defrauded investors, according to the SEC.
FINRA concurrently began its own investigation into Jones’ activity, requesting information from him on 11/23/2021 and 12/17/2021. Jones failed to respond to FINRA’s request and was subsequently suspended. After failing to request termination of his suspension, FINRA permanently barred Jones from affiliation with any FINRA member in all capacities, effective 02/28/2022.
On 5/21/20, a customer filed a dispute alleging unsuitable investment recommendations and misrepresentations by Jones. The client, represented by legal counsel, requested damages of $335,0000. Through FINRA arbitration, Jones was ordered to pay $200,000 in compensatory damages plus interest at the rate of 3% per annum beginning 6/21/2018, until the award is paid in full. Additionally, he was ordered to pay $4,500 in FINRA hearing session fees, which are due immediately, and effective 2/24/2022.
Previously, on 10/13/2020, Jones’ employer, Merrill Lynch, discharged him, citing “Loss of management confidence resulting from a regulatory investigation and conduct including failure to disclose an outside business activity.” No additional information is available.
Forrest Jones has two previous disclosures. One is a civil lien for $550, dated 12/21/15. The second is listed as a “compromise,” with a direct payment procedure and no dollar amount.
Stockbrokers Cannot Recommend Outside Business Activities
Stockbrokers are prohibited from selling investments or outside business activities (OBA) without express written permission from their brokerage firms. FINRA Rule 3270 and 3280 covers OBA reporting requirements for stockbrokers and members of the securities industry.
FINRA Rule 3270 states no registered person may be an employee, independent contractor, sole proprietor, officer, director, or partner of another person, or be compensated or have a 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 prior written notice has been given to the firm in the form specified by the firm’s rules.
If your financial advisor recommended an investment that was not approved by the firm or fails to disclose material facts about the investment, you may be able to recover your losses through securities arbitration.
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