In June 2024, the Financial Industry Regulatory Authority (FINRA) took disciplinary action against Bryan Noonan, a previously registered broker and investment advisor. FINRA’s findings allege that Noonan refused to respond to requests for information and documents in connection with an investigation into whether he engaged in undisclosed outside business activities (OBAs) and private securities transactions. This case highlights the seriousness of such allegations and the potential consequences for investors.
According to FINRA’s publicly available records, Bryan Noonan entered the securities industry in 2004 and has worked with several prominent firms, including Merrill Lynch, Pierce, Fenner & Smith Incorporated; Wells Fargo Investments, LLC; NYLife Securities LLC; Wells Fargo Advisors, LLC; Edward Jones; and Raymond James Financial Services, Inc. Despite his extensive experience, the recent allegations against Noonan serve as a reminder that investors must remain vigilant when entrusting their financial well-being to any advisor.
Understanding FINRA Rules and “Selling Away”
FINRA Rule 3270 requires financial advisors to disclose any outside business activities in which they become involved. Additionally, FINRA Rule 3280 prohibits financial advisors from engaging in private securities transactions, which are transactions that take place away from their employing brokerage firm. These rules are in place to prevent “selling away,” a practice that is strictly prohibited by FINRA.
“Selling away” occurs when a financial advisor recommends or sells securities and investments to clients that are not offered by the brokerage firm with which they are employed. This practice is illegal and violates industry rules, even if the financial advisor does not earn any compensation for recommending an outside investment. The purpose of this prohibition is to ensure that financial advisors only offer to sell securities that have been thoroughly vetted by their employer through a rigorous due diligence process.
Consequences and Lessons Learned
In Noonan’s case, his refusal to respond to FINRA’s requests for information and documents resulted in severe consequences. Without admitting or denying the findings, Noonan consented to the imposition of a bar from associating with any FINRA member in all capacities. This disciplinary action serves as a stark reminder of the importance of complying with FINRA’s rules and regulations.
As renowned investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” This quote underscores the importance of working with financial advisors who adhere to industry standards and prioritize transparency. Investors should always research their financial advisors thoroughly, including checking their background and any past complaints through resources like FINRA’s BrokerCheck.
It is also worth noting that, according to a study by the University of Chicago, approximately 7% of financial advisors have a history of misconduct. While this may seem like a small percentage, it translates to a significant number of individuals who have faced allegations or disciplinary actions.
The case of Bryan Noonan serves as a cautionary tale for investors, emphasizing the importance of working with reputable financial advisors who operate within the bounds of FINRA’s rules and regulations. By staying informed and vigilant, investors can better protect their financial interests and avoid falling victim to misconduct in the financial industry.
