Investors of Dennis Allen Hayes, recently with Newbridge Securities Corp., should call 303-300-5022 for a free and confidential consultation.
In January 2019, the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization policing securities brokerages and brokers, filed suit against Hayes. That complaint stated Hayes engaged in prolonged fraud in the handling of investor accounts. In particular, he sold investments that were not approved by his employer and that were not legitimate investments. Such an action is commonly referred to as “selling away.”
Between March 2010 and June 2016 (the “Selling Away Period”), while he was associated with Newbridge Securities Corporation (BD No. 104065) (“Newbridge” or the “Firm”), Dennis Allen Hayes (“Hayes”) recommended that nine investors, eight of whom were Newbridge customers, invest a total of $2.7 million in five companies. Hayes did not provide any written or any other notification to Newbridge regarding his participation in these private securities transactions. The investors suffered losses of at least $2.3 million, after one of the companies filed for bankruptcy and the other companies ceased operations.
In addition, from June 2011 through June 2016, Hayes used two personal email accounts of his to communicate with four customers about their Firm accounts. Hayes also communicated via text message with one Firm customer about her Firm account between November 2015 and June 2016. The use of private email and text messaging is a common mechanism to perpetrate fraud because it is generally done with the intent of hiding the communications from an employer.
On September 16, 2016, Hayes was permitted to resign because, “first, the Firm has an open internal review regarding a customer complaint that evolved into a[n] arbitration for possible selling away and private securities transactions [and] second [Hayes] had little or no production [other than fraud] in the last 12 months”.
Upon Hayes’ recommendation and with Hayes’ assistance, nine investors purchased securities issued by five privately-held companies without Hayes’ employer’s knowledge. Eight of the investors were customers of Newbridge.
The securities Hayes sold were promissory notes issued by MSLLC and IRLLC, common stock and promissory notes of BTInc, common stock and promissory notes of KIInc (a successor of BTInc) and common stock of FXInc.
The owner of the five companies was a family friend of Hayes’.
These investments are currently lost, but investors have recourse. The employer of Hayes, Newbridge, had a duty to oversee the transactions of Hayes and to supervise against the sale of investments that Newibridge had not researched or approved.