The Financial Industry Regulatory Authority is penalizing a California-based advisor for improperly borrowing from his customers and participating in private securities transactions away from his firms, AdvisorHub reports.
FINRA disclosed the actions against Jose Antonio “Tony” Navarro in a letter of acceptance, waiver and consent. Navarro was fined $20,000 and suspended for one year.
In the AWC letter, the authority cited two areas of rules violations:
-Between May 2017 and March 2020, while associated with two different member firms, it was determined that Navarro participated in private securities transactions without providing the required notice to his firms. After personally investing in an alternative energy company, FINRA said that Navarro introduced the investment opportunity to five of his customers. He referred his customers to the company’s principals, recommended the investment, and took other steps to facilitate the investments, which amounted to $87,500 from the five customers. In July 2022, the company filed for bankruptcy and none of the investors received their money back. FINRA said Navarro received no selling compensation from the transactions, but he falsely represented in compliance agreements that he did not engage in selling away. He was found to have violated FINRA Rules 3280 and 2010.
-While associated with Independent Financial Group in 2019 and 2022, Navarro, through his disclosed outside business, a tax preparation business, borrowed a total of $80,000 from two of his IFG customers. Both loans were documented through loan agreements that provided for repayment of the principal with interest. Navarro did not obtain approval from IFG prior to obtaining the loans. Navarro timely repaid the loans to Customers A and B in full and with interest. In annual compliance agreements he falsely
represented to IFG that he did not solicit, accept, or make loans to clients for any reason, according to FINRA, thus violating Rules 3240 and 2010.
FINRA also said that Navarro initially provided partial and misleading information after being asked to identify all of his customers who invested in the company and to provide relevant emails. He initially identified only one investor name but after a follow-up request disclosed the remaining four.
Navarro did not admit or deny FINRA’s findings, but accepted them and consented to the sanctions. He remains registered as an investment adviser through Newbridge Financial Services Group, and the suspension will only impact his license with FINRA member firms.
Neither Navarro nor his lawyer, Christopher Cooke in Burlingame, California, responded to requests for comment.
Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655 6002 or through our online contact form for a no-cost evaluation of your matter.
