A former Wells Fargo broker has been penalized by the Financial Industry Regulatory Authority over an unapproved outside business activity, Advisor Hub reported.
FINRA suspended George J. Cairnes for four months and fined him $25,000 due to his involvement in a real estate partnership from August 2015 to April 2023.
In a settlement letter, FINRA said Cairnes “partnered with a firm customer to identify, buy, manage, and sell real estate” without firm permission, and created a limited liability company for the “partnership’s activities.”
It was alleged that Cairnes did not give Wells Fargo prior notice about his real estate business and falsely attested on multiple firm compliance questionnaires that he was not participating in an outside business activity.
He was accused of violating the following FINRA rules:
Rule 3270, which states: “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.”
Rule 2010 states: “A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”
Cairnes did not have legal representation in the settlement and did not respond to a request for comment. A spokesperson for Wells declined to comment.
FINRA began its investigation of Cairnes after he was terminated by Wells Fargo in July 2023. In its U5 notice, Wells said he was fired over allegations that he “facilitated a loan between clients as well as loans and other transactions between a client and individuals associated with [Cairnes].”
In April 2024, Cairnes consented to a Disciplinary Order by the Texas State Securities Board, which determined that he was paid at least $175,000 for helping the client set up and run a real estate business. Cairnes was barred from registering to be licensed in Texas for two years.
Cairnes’ BrokerCheck record indicates he also faces a pending customer dispute over allegations that the client established a line of credit to loan money to Cairnes as well as his family members and friends which has not been fully repaid.
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