Finra continues its pursuit of brokers involved in peddling promissory notes in the Woodbridge Group of Companies, most recently fining and suspending a veteran broker who allegedly made over $33,000 in commissions from the real estate investment scheme involving the firm, the industry’s self-regulator says.
Between June 2016 and September 2017, Fredrick Randhahn allegedly sold $625,000 in Woodbridge promissory notes to five investors, two of whom were clients of Sigma Financial, where he was registered at the time, according to a letter of acceptance, waiver and consent published by Finra.
Randhahn allegedly also personally invested $125,000 in the notes and made $33,167.67 in commissions from the sales to the investors, the regulator says. But he allegedly never sought approval from Sigma to engage in private securities transactions, as required by the firm’s written supervisory procedures, according to the letter of consent. Randhahn allegedly failed to disclose the sales on both his 2016 or 2017 firm questionnaires, Finra says.
Sigma terminated Randhahn on Aug. 24, 2018, noting in his termination notice that the company "ha[d] reason to believe the representative sold unapproved investments to customers,” according to the regulator. He has not registered with another firm, according to his BrokerCheck profile.
Randhahn, who’s been in the financial services industry since 1987, agreed to a nine-month suspension and a $5,000 fine, as well as to disgorge $33,167.67, plus interest, without admitting or denying Finra’s findings, according to the letter of consent.
Woodbridge filed for Chapter 11 bankruptcy in December 2017. Last month, a federal judge in Florida sentenced Robert Shapiro, the former CEO of Woodbridge, to 25 years in prison for his role in a $1.3 billion Ponzi scheme that affected around 10,000 people.
In July, Finra suspended another broker who allegedly sold $895,000 worth of Woodbridge notes and ordered him to pay disgorgement of $19,534 plus interest. In February, the regulator barred another veteran broker who allegedly sold $3.49 million of the notes.