According to FINRA, the suspended advisor collected more than $10 million for a Texas company without his employer’s approval.
The Financial Industry Regulatory Authority last week suspended and fined a broker who allegedly raised more than $10 million for his fitness company without obtaining written approval from his employer-advisor. did.
FINRA fined Jeffrey W. Davidson $15,000 and suspended him from associating with FINRA members in any capacity for 21 months, effective February 19.
According to FINRA, from May 2021 to January 2022, while employed at Equitable Advisors LLC in Austin, Texas, Mr. Davidson engaged in private equity transactions without written notice or written approval from the firm. participated in the sale.
Equitable fired Davidson in January 2022 for his involvement in the trades, according to FINRA’s BrokerCheck, a comment from the now suspended broker. Multiple disclosures were made to corporate management. ”
According to FINRA, Mr. Davidson did not earn any commissions in connection with the sale of the fitness company he co-owned and founded with his wife, but the couple earned about $2.4 million by selling a portion of their ownership to outside parties. He said he received the dollar amount.
FINRA found that Mr. Davidson disclosed his outside business ownership to Equitable, which approved it, but did not obtain approval to engage in a private offering of ownership units.
According to the FINRA report, in connection with this offering, Mr. Davidson hired a placement agent, approved a private placement memorandum for distribution to prospective investors, presented a business plan to prospective investors, and It is said that the terms of the transaction were negotiated with the company.
According to FINRA, the offering raised $10.21 million from 18 investors, including a private equity fund that invested $5 million.
Seventeen other accredited investors invested in the fitness company through limited partnerships. These investors included partners at a private equity fund and employees at a fitness company. Two employees of the fitness company were also clients of Davidson at Equitable, FINRA said.
As part of the settlement, Mr. Davidson accepted and agreed to FINRA’s findings without admitting or denying them.
FINRA did not name Davidson’s outside business in the acceptance, waiver, and consent letter, but the records show that he and his wife jointly run a group fitness class management company. It is shown. camp gladiator, She founded the company in 2008 after winning the television contest “American Gladiators” and serves as its CEO.
The Davidsons also founded and co-manage CG Victory, a nonprofit Christian sports camp for children, according to information the suspended broker provided to FINRA and his associates. bio His new company, Victory Financial Group, a registered investment advisor, lists him as founder and chairman.
FINRA suspended him as a broker, but FINRA and the Securities and Exchange Commission said he was listed as an investment adviser.
The sanctions letter states that while suspended, Davidson “must not interact with FINRA members in any capacity, including in an administrative or ministerial capacity.” According to the Acceptance, Waiver and Agreement dated February 16, he is no longer registered with or affiliated with a FINRA member firm.
Mr. Davidson has been an investment advisor at Victory Financial since last year. SEC record show. The company had more than $143 million in assets under management as of May 30.
Davidson did not immediately respond to a request for comment sent via Victory Financial email.
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