FINRA Suspends Ex-Baird Broker Over $200K in Unapproved Transactions

FINRA building in New York. (Photo: Ron Pechtimaldjian)

The Financial Industry Regulatory Authority suspended a broker for five months after he sold about $200,000 in private transactions to 15 investors without seeking approval from Baird, the firm he was registered with at the time.

Advisor Michael Jason Collins signed a letter of acceptance, waiver and consent Nov. 12 in which he agreed to the suspension and to pay a $10,000 fine over his actions. He agreed to the letter without admitting or denying the findings. FINRA accepted the letter Monday.

Between February 2014 and December 2015, Collins violated NASD Rule 3040 (for conduct occurring before Sept. 21, 2015) and FINRA Rules 3280 (for conduct occurring on or after Sept. 21, 2015) and 2010 by participating in private securities transactions totaling about $200,000 without providing prior notice to Baird, FINRA said.

Collins was first registered with FINRA as a general securities representative in November 1999. From November 1999 to October 2010, Collins was consecutively registered as a GSR with four FINRA member firms, including Citigroup and Morgan Stanley, according to FINRA's BrokerCheck website.

In October 2010, Collins became registered as a GSR with Baird. On Oct. 30, 2017, Baird terminated Collins' registration by filing a Uniform Termination Notice for Securities Industry Registration (Form U5), stating that Collins had "[i]ntroduced client to a private investment without Firm approval," according to the letter of acceptance, waiver and consent.

In November 2017, Collins registered as a GSR with FINRA member firm Kingsbury Capital. On Nov. 7, 2019, that FINRA member firm terminated Collins' registration by filing a Form U5, according to the letter. While at Kingsbury, he was involved in a dispute in which a customer claimed he charged excessive fees, but that was settled March 5, 2018 for $18,538, according to BrokerCheck. That was the only disclosure cited over the course of his 19-year career thus far.

More Details

Between February 2014 and December 2015, Collins solicited 15 individuals to invest about $200,000 in membership units of an LLC organized to operate a new restaurant in Chicago, according to FINRA. Although Baird had approved Collins and his father's own investment in the LLC, the firm "prohibited Collins from soliciting any other investors," the letter said, adding: "Despite this instruction, Collins participated in the sale of the membership interests by, among other things, introducing the investors to the business partners in the investment, discussing his own investments in the project with them, and attending networking events with the investors where the investment was discussed."

Seven of those 15 investors were customers of Baird, the letter said, adding the restaurant opened in early 2017 and closed only about nine months later. Collins failed to provide notice to Baird of his participation in the 15 individuals' investments, and also failed to disclose that participation on his annual compliance attestations in 2014 and 2015, the letter said.

Also, in 2016, Collins helped arrange for the LLC to repurchase the membership units from an unspecified number of the investors as part of a broader deal and he also separately paid the investors who participated in the agreement the difference between their original investment and the amount they received pursuant to the agreement, according to the letter. Collins didn't disclose his involvement in this arrangement to Baird, according to FINRA.

Collins isn't currently registered or associated with a FINRA member firm. His attorney, Nicholas P. lavarone of The lavarone Law Firm in Chicago, didn't immediately respond to a request for comment.

— Check out FINRA Bars Ex-Merrill Rep for Taking Co-Worker's Money on ThinkAdvisor.