The Financial Industry Regulatory Authority says it has suspended and fined a former Wells Fargo broker who had allegedly misrepresented his outside business to obtain Covid relief while registered with the firm.
Wells Fargo discharged Kenric Sexton in November 2020 over allegations he had “applied for business support from the Small Business Administration when the employee did not have a pre-existing formal business as required,” according to his BrokerCheck record. Wells Fargo added that the activity wasn’t related to its securities business and that no customer harm was identified as a result of it, according to BrokerCheck.
Finra claims that in June 2020, Sexton failed to carefully read the requirements for the Economic Injury Disaster Loan program, administered by the Small Business Administration as part of Covid-19 pandemic relief to small businesses. Sexton allegedly didn’t operate any business that would have been eligible for the SBA small business loan and was instead seeking it to finance a self-directed online trading account, Finra says in a letter of acceptance, waiver and consent published last week.
To get the loan, Sexton allegedly “negligently misrepresented that he operated his self-directed online trading account as a sole proprietorship,” thereby violating Finra’s rules related to unethical, business- related misconduct, according to the industry’s self-regulator.
The SBA, meanwhile, granted Sexton a $1,000 advance on the loan but in July 2020 denied the loan application, Finra says.
In late June, Sexton agreed to a one-month suspension and to pay a $2,500 fine, without admitting or denying the findings, according to the self-regulator.
Sexton began his financial services industry career in 2014 with Wells Fargo, according to BrokerCheck. Since his discharge from Wells in November, Sexton has not registered with another firm, according to BrokerCheck.
In addition to the Economic Injury Disaster Loans program, the SBA also rolled out its Paycheck Protection Program loans program to help small businesses in the wake of the Covid-19 crisis. Millions of borrowers obtained hundreds of billions of dollars in loans through the two programs, but evidence of abuse quickly emerged, including instances of wealth management firms with disciplinary histories receiving millions of dollars in PPP loans.
In December, after much stalling, the SBA released detailed information about the recipients of the two loan programs.
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