According to FINRA, Bruce Cameron Amman was fined $5,000 and suspended for 12 months for participating in a private securities transaction without providing prior written notice to his member firm, and for providing an incorrect answer on a firm compliance questionnaire.

Amman participated in a private securities transaction involving a customer who was a sophisticated investor. The customer was selling partnership interests in a limited partnership which would generate large capital gains, and wanted to invest in a specialized tax-advantaged investment to offset those gains. Amman introduced the customer to a third party with experience in these types of investments.

Beyond just making an introduction, Amman provided information about the customer to the third party, participated in phone calls with the customer and the third party, and facilitated the wire transfer out of the customer's account at the firm to fund the investment. The customer invested approximately $3.5 million in the investment, which was a security structured as a private placement.

These activities constituted participation in a private securities transaction. FINRA rules require registered representatives to provide prior written notice to their firms before participating in such transactions, even when no compensation is received. This requirement exists so that firms can supervise the transactions and assess whether they are appropriate.

Amman did not provide the required written notice to his firm. Additionally, he provided an incorrect answer to a question on an annual firm questionnaire that asked whether he had participated in a private securities transaction. This false certification prevented the firm from discovering and supervising the transaction.

Notably, the customer did not complain about the transaction, and as a sophisticated investor, may have understood the risks involved. However, the failure to disclose the transaction to the firm still violated FINRA rules.

Investors should understand that registered representatives must disclose all private securities transactions to their firms, even when dealing with sophisticated investors and even when the transactions turn out well. The disclosure requirement exists for investor protection and to ensure proper supervision. When evaluating investment opportunities, investors should verify that any transaction is properly disclosed to the broker's firm and documented in firm records.