FINRA has suspended stockbroker David T. Phillips (CRD #3094195) for nine months from the securities industry and ordered him to pay a $5,000 fine. These sanctions arose from Mr. Phillips’ solicitation of Future Income Payments, LLC. This blog has previously written about Future Income Payments, LLC.
FINRA alleged that between May 2017 and April 2018, David Phillips participated in private securities transactions totaling $876,636, without prior disclosure and approval from his employer at the time, ProEquities, Inc. Specifically, FINRA alleged:
- Between May 2017 and April 2018, Mr. Phillips solicited eight investors to purchase $876,363 in securities of Future Income Payments, LLC.
- Future Income Payments, LLC represented itself as a structured cash flow investment that purchased pensions at a discount from pensioners and then sold a portion of those pensions as a “pension stream to investors.”
- Future Income Payments, LLC reportedly promised investors a 7% to 8% rate of return.
- Phillips received a total of $33,184 in commissions associated with his sales of Future Income Payments, LLC.
- ProEquities, Inc. prohibited its financial advisors from participating in private securities transactions without prior written approval from the firm.
- Phillips did not provide notice to ProEquities, Inc. before soliciting investors to purchase securities of Future Income Payments, LLC.
In April 2018, Future Income Payments, LLC ceased business, owing nearly $300 million in unpaid investor payments to over 2,600 individuals. In March 2019, Future Income Payments, LLC and its owner, Scott A. Kohn, were indicted by a Federal Grand Jury alleging a conspiracy to engage in mail and wire fraud. According to the indictment, Future Income Payments, LLC operated a Ponzi scheme.
Mr. Phillips was a financial advisor at ProEquities, Inc. in Gilbert, Arizona from February 2007 until December 2017. He was then employed by Moloney Securities Co. Inc. as a registered representative for one year, from November 2017 to November 2018. Moloney Securities Co. Inc. terminated Mr. Phillips’ employment alleging that he failed to following the firm’s policies and procedures with respect to outside business activity.
Brokerage firms like ProEquities, Inc., must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.
According to public records, at least two customers has already filed a FINRA arbitration complaint against Mr. Phillips and ProEquities, Inc. related to the solicitation of Future Income Payments, LLC.
If you have lost money because you invested in Future Income Payments, LLC, contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a boutique law firm located in the heart of New York City. Iorio Altamirano LLP represents investors nationwide who have suffered investment losses due to securities fraud.
Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.