A top brokerage executive with an independent-contractor firm has been fired for failing to report outside business activity, according to records filed with the
Financial Industry Regulatory Authority.
Questar Capital Corp., a unit of Allianz Life Insurance Company of North America, in January fired Jason Kavanaugh, Questar’s senior vice president of mergers and acquisitions, because he failed “to disclose private securities transactions and outside business activities” in accordance with company policy, according to FINRA’s Central Registration Depository.
In December,
InvestmentNews reported that Mr. Kavanaugh bought shares of phony, unregistered securities created by Edward May, whom the Securities and Exchange Commission has charged with allegedly offering sham deals to investors in the form of shares of bogus Las Vegas casino and resort telecommunications contracts. About 1,200 investors, many elderly, bought into the scheme, according to the SEC.
Reps and brokerage executives failing to disclose any outside business deals is a major blunder, noted one industry attorney.
“Because of the significant nature and extent of regulation over the financial services industry, all outside investments must be disclosed to the employing firm,” said one industry attorney, who asked not to be named.
“There is absolutely no wiggle room here.”
Mr. Kavanaugh paid $57,000 in November 2006 to buy “two units” of ATL Project One LLC, which was offered by Mr. May’s Lake Orion, Mich. E-M Management Co. LLC, according to a copy of a check from Mr. Kavanaugh obtained by
InvestmentNews.
He also set up a business JASTAR LLC, which was the official subscriber to the deals.
A spokesman for Golden Valley, Minn.-based Allianz Life, Hubertus Kuelps, said the company had no comment beyond Mr. Kavanaugh’s FINRA employment record.
Questar, also based in Golden Valley, merged last year with USAllianz Securities.
The combined firm has more than 1,000 affiliated reps and advisers.
