The Financial Industry Regulatory Authority (“FINRA”) issued a nine-month suspension and $5,000 fine to securities broker Fred Randhahn (CRD#: 1338801, Ogden, Utah) on November 14, 2019 for his role in participating in Woodbridge Group of Companies LLC sales away from Sigma Financial. Evidently, Randhahn executed a letter of Acceptance, Waiver and Consent (“AWC”) to resolve allegations that he broke FINRA rules by not getting Sigma Financial’s permission. Here is more on the disciplinary action:
Fred Randhahn Sells Woodbridge Group of Company Promissory Notes To Sigma Clients
FINRA says that Fred Randhahn violated FINRA Rule 3280. Apparently, this rule compels a securities broker or financial advisor to notify his or her employer about any securities transactions that the broker or advisor expects to participate in away from the employer. Notably, Rule 3280 requires the broker or advisor to get permission to engage in private securities transactions.
Evidently, Fred Randhahn enabled investors’ purchases of investments in Woodbridge Group of Companies. FINRA says that five investors all together purchased $625,000 in Woodbridge related investments. Some of those investors included Sigma clients. Apparently, Randhahn made more than $33,000 in commission from selling the promissory notes. All the while, Sigma stated in its supervisory procedures that Randhahn had to provide notice and get approval to sell promissory notes. Randhahn allegedly ignored Sigma’s directives. Worse yet, he allegedly falsely denied selling investment products and securities. For this reason, Sigma Financial Corporation disaffiliated with him on August 24, 2018.
Woodbridge Files Bankruptcy, Ordered To Pay $1 Billion For Allegedly Running Ponzi Scheme
Apparently, Woodbridge, the supposed real-estate investment fund that Fred Randhahn solicited, filed for Chapter 11 bankruptcy. Then, SEC obtained judgements against Woodbridge and its operator, Robert Shapiro. The Florida court ordered Shapiro, Woodbridge and its affiliates to pay $1 billion for allegedly running a Ponzi scheme. Also, in a Complaint filed April 11, 2019, SEC alleged that two Woodbridge directors, Ivan Acevedo and Dane Roseman, had a role in the alleged Ponzi schemes, raising more than $1.2 billion. It appears that many of the 8,400 plus investors were seniors.
Sigma Client Files Dispute Alleging Fred Randhahn Sold Unapproved, High Risk Investments
Evidently, a client of Sigma Financial Corporation brought FINRA Arbitration Claim #: 18-03656. In this Statement of Claim dated October 22, 2018, the client indicates that Fred Randhahn sold unapproved investments. Supposedly, Randhahn sold a Woodbridge Mortgage investment to the client in 2016 and 2017. Allegedly, these were sham investments that generated losses. For this reason, the client demanded $400,000 in compensation in this ongoing matter.
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