At a glance
- FINRA found that Robertson recommended a customer with about $175,000 in liquid net worth put $48,000 into an illiquid private fund in January 2024, more than 25% of her liquid net worth.
- For advisors who place private funds in retail accounts, the case turns on two concrete inputs: the client's liquid net worth and the fund's minimum investment.
- The customer told Robertson she did not have enough liquid assets to make the fund's minimum investment at once.
FINRA suspended former Finalis Securities LLC representative Deyon Robertson for five months over a $48,000 private fund sale that the regulator found violated Regulation Best Interest.
FINRA found that Robertson recommended a customer with about $175,000 in liquid net worth put $48,000 into an illiquid private fund in January 2024, more than 25% of her liquid net worth. He consented to the suspension, a $10,000 fine and partial restitution of $2,400 plus interest without admitting or denying the findings. FINRA accepted the settlement Oct. 21. The DI Wire first reported.
For advisors who place private funds in retail accounts, the case turns on two concrete inputs: the client's liquid net worth and the fund's minimum investment. Splitting a $48,000 purchase into installments over several months did not change the finding.
The customer told Robertson she did not have enough liquid assets to make the fund's minimum investment at once. He recommended three installments over several months as the money became available, according to FINRA. The final purchase came in April 2024. It was her first investment in an alternative product. The fund invested in other funds that bought equity interests in individual homeowners' properties. Robertson earned $2,400 in commissions, the same amount as the restitution ordered.
The fund was not obligated to make distributions or repurchase interests, and investors could sell to a third party only with the manager's consent, according to the settlement. Its private placement memorandum said the interests “should be purchased only by investors who have no need for liquidity in their investment.” About a year later the customer sought to withdraw part of the investment because of financial hardship and could not liquidate it, FINRA found.
Separately, FINRA found that in July 2024 Robertson solicited three Finalis customers to each invest $44,000 in a limited liability company he created to buy, renovate and sell a residential property. He invested the same amount. The venture was not profitable and he received no selling compensation, but he did not give Finalis prior written notice and falsely attested on his 2024 annual compliance questionnaire that he had disclosed all private securities transactions.
FINRA determined the Reg BI violation was willful, a finding that subjects Robertson to statutory disqualification. The matter originated from the regulator's 2024 cycle examination of Finalis, and the settlement includes no findings against the firm. It does not prevent the customer from pursuing her own action to recover other losses.
The SEC has proposed performance fees for regulated fund advisers and sought comment on a FINRA exam as an accredited-investor route.
Reported by the Evergreen & Interval Funds desk from The DI Wire. Published . Corrections