Haddadian’s employment with both Morgan Stanley and Wells Fargo ended in a six-month period in 2022. Both companies found that Haddadian was involved in outside business activities (OBA) involving real estate.
- Haddadian voluntarily resigned from Morgan Stanley on 1/13/2022 after he failed to disclose his involvement in limited liability companies (LLCs) along with firm clients that bought, sold, and rented homes in the state of Ohio.
- Wells Fargo discharged Haddadian on 6/12/2022 after he failed to disclose his involvement with an LLC that acquired and rented real estate.
FINRA began its own investigation following the discharges which included requests for information from Haddadian. When Haddadian failed to respond to these requests from FINRA, it then notified him of his suspension in letters dated 10/182022 and 11/14/2022. FINRA then barred him from all association with FINRA members on 1/23/2023. Haddadian failed to respond and request termination of his suspension within three months of notification. FINRA then indefinitely barred him from all associations with FINRA broker-dealers.
Brokers And Outside Business Activities (OBA)
You might not think your broker or investment advisor would have other business interests on the side. But in these days of “gig work” and “side hustles,” nearly everyone has a business venture in addition to their “day job.” Those who work in the financial services sector are no exception. Your broker may very well have “something on the side,” but their broker-dealer needs to know about it first. Especially if that OBA involves the purchase and sale of securities.
FINRA’s Rule 3270 states that “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the 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 he or she has provided prior written notice to the member, in such form as specified by the member.”
In other words, before engaging in any outside business activities, they must notify their firm in writing and receive written authorization first. This rule applies to any activity whether securities are involved, or not. The firm decides whether their proposed endeavor is acceptable to both the firm and clients, and how the activity will be conducted. This helps to keep brokers accountable to their clients.
Passive investments and private securities are not part of this OBA rule, but brokers must also report these and their other investments to their firm to avoid a conflict of interest.
Did You Invest With Sevag Haddadian?
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