According to FINRA, Brian Boyer Davis was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested during a FINRA investigation.
FINRA's investigation originated from review of amended Forms U5 filed by Davis's former member firm. Form U5 is the uniform termination notice that firms must file when a registered person's employment ends. The firm filed an amended Form U5 disclosing that it had initiated an internal review of Davis's potential involvement in a private securities transaction. Subsequently, the firm filed an additional amended Form U5 disclosing that Davis was subject to an investment-related, customer-initiated civil litigation.
Private securities transactions, sometimes called "selling away," occur when registered representatives participate in securities transactions outside the scope of their employment with their member firm. FINRA rules require representatives to provide prior written notice to their firms before engaging in private securities transactions. This requirement allows firms to supervise these activities and assess whether they present conflicts of interest or suitability concerns. Participating in private securities transactions without firm approval violates FINRA rules and can result in serious disciplinary action.
The combination of an internal firm review into potential selling away and customer litigation suggests that Davis may have recommended or facilitated an investment outside his firm that resulted in customer harm. However, because Davis refused to appear for testimony, FINRA could not fully investigate what occurred.
On-the-record testimony, where a witness answers questions under oath with a court reporter present, is a critical investigative tool. FINRA uses testimony to gather facts, assess credibility, and determine whether rule violations occurred. All persons associated with FINRA member firms have an absolute obligation to cooperate with regulatory investigations, including appearing for testimony when requested.
Davis's refusal to testify prevented FINRA from completing its investigation and determining the full facts regarding the potential private securities transaction and related customer litigation. The bar was imposed for the failure to cooperate, which itself is a serious violation regardless of the underlying conduct being investigated.
A bar effectively ends an individual's securities industry career. While barred individuals can technically apply for re-entry after two years, such applications are rarely successful, particularly when the bar was imposed for refusing to cooperate with regulators.
For investors, this case underscores the importance of investigating financial professionals before investing. FINRA's BrokerCheck provides free access to registration and disciplinary information for all registered brokers.
