According to the Financial Industry Regulatory Authority (FINRA), Troy Bailey, a former broker of Advisor Group’s Sagepoint Financial was fined $5000 by FINRA for using $210,000 of clients’ funds. Apparently, the former broker used the clients’ monetary collection to make unrelated and unapproved private securities transactions. As per FINRA, In the course of four months, from February to May, the Advisor, Troy R. Bailey asked investors to purchase securities in the upcoming income payments.
FIP had been a part of a multimillion-dollar “Sham Pension Scheme” where investors were persuaded to buy into “structured cash flows” by a network of brokers and advisors, through FIP.
SagePoint parent Advisor Group and Robert W. Futhey, along with Fraser Stryker, an attorney at a law firm who acted for Mr. Bailey in his dispute with FINRA, took time and did not instantly respond to requests for comment Tuesday.
Despite all the dispute, Bailey proceeded further with neither admitting nor denying FINRA’s investigations. He went on to submit a letter of acceptance, waiver, and consent written to FINRA on October the 13th. In the above-mentioned letter, he agreed to the fine, along with signed up for half a year suspension from keeping any relation with any FINRA firm’s member in any capacity. The letter was accepted by FINRA on Monday.
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Hence, Mr. Bailey lost his registration as a broker or RIA, with regards to the report published on the FINRA BrokerCheck website. Beginning from November 2016 to the end of March 2018, Mr. Bailey was registered with FINRA and associated with SagePoint as an investment company and variable contracts products representative.
On the 18TH of March, 2018, SagePoint submitted a form, U5, leading to Mr. Bailey’s termination with regards to his association with the firm as well as registration with FINRA. Moreover, it has also been said that, on September 13th, 2019, SagePoint submitted another, but modified form U5, revealing Mr. Bailey’s yet another association with the matter, in which he was the subject of a customer and investment contract, as stated by FINRA.
As per the detail, FINRA set forth in its claims that Mr. Bailey sold $210,000 in FIP purchase agreements to four investors, in which three being SagePoint’s customers; and Bailey receiving a total of $8,900 as commissions received with regards to the transactions.
During all times of the stated time period, FINRA alleged, Mr. Bailey’s employer member firm made it mandatory to take written approval from the firm prior to participating in any private security transactions by its registered representatives. However, Mr. Bailey did not submit any written notice to the firm, while engaging in transactional activities involving FIP, nor did he acquire any firm’s written approval, as accused by FINRA.
Furthermore, FINRA stated, In April 2018, FIP discontinued business owing an approximate amount of $300 million in unpaid investor payments. In addition to FINRA’s accusations, on the 12th of March, 2019, the United States cast aspersions on FIP as well as it’s owner, Scott A. Kohn, with regards to his connection with conspiracy to engage in mail and wire fraud in the FIP’s operation.
According to FINRA, Mr. Bailey, with his doings, violated FINRA rules 3280 (governing private securities transactions) and 2010 (governing standards of commercial honor and principles of trade).