The Financial Industry Regulatory Authority (FINRA) has barred Gary Wayne Hammond (Gary Hammond) an former advisor with MML Investor Services located in Charlotte, NC because of claims of fraudulent private securities transactions. According to the claim, Hammond was involved in 14 private securities between February and October 2016 in the amount of $1.6 without the required written notice of his firm.
According to FINRA, the transactions involved were 3 limited liability companies that were controlled by Hammond’s half-brother. The claim alleges that Hammond referred investors to his half-brothers firm and would get a commission/compensation for his referrals. The commission paid to Hammond was about 6 percent but was lower in a couple of cases. Unfortunately for investors, two of the three companies turned out to be alleged Ponzi schemes.
During this time, Hammond referred ten customers and falsely answered questions from his broker-dealer, MML Financial, that he was not involved in any private securities transactions. These transactions are often referred to as “selling away” because they do not go through the broker-dealer.
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Hammond was fired in April 2017 from MML Financial in connection with an internal review of the company’s policy regarding selling away.
Broker-dealers rarely approve financial advisors participating in private securities transactions because of the high risk of fraud. In this case two of the investment companies were a Ponzi-scheme. Investors can guard against these types of fraud by using a third party to verify a company.
Another way investors can check can do a “smell test” on an investment product is to see if the company is publicly traded. This allows an investor to see the current price and record of the investment. Ponzi-schemes are generally not listed on the exchange.
If you or a loved one thinks they are invested in a fraudulent investment, then it is best to contact an investment fraud lawyer as soon as possible. They will investigate the company and financial advisor and also go over the options for recovering your losses.