The Financial Industry Regulatory Authority Inc. has suspended Jeffrey P. Schwebach, a former Independent Financial Group broker, for selling promissory notes without the permission of his firm and despite a firm prohibition of their sale.
Finra also ordered that he disgorge the $19,534 he received in commissions on the sales.
Between October 2016 and October 2017, Finra said that Mr. Schwebach, of Dell Rapids, S.D., solicited investors to purchase promissory notes relating to the Woodbridge Group of Companies, a purported real-estate investment fund. He sold $895,000 in Woodbridge promissory notes to 18 investors, 13 of whom were IFG customers.
In a letter of acceptance, waiver and consent, Finra said that Mr. Schwebach disclosed Woodbridge to IFG, but identified it as an outside business activity involving first-position mortgages, not as private securities transactions. In addition, he falsely attested in his 2016 and 2017 compliance questionnaires that he had not engaged in securities activities or offered products that were not approved by IFG.
Woodbridge filed for bankruptcy in December 2017. IFG discharged Mr. Schwebach in June 2018. He spent seven years with the firm, after joining in 2010, following short stints at three other firms and 16 years with Pruco Securities, starting in 1987.