According to FINRA, Christopher T. Joseph was assessed a deferred fine of $10,000 and suspended for six months on January 12, 2022, for engaging in outside business activities and private securities transactions without providing required notice to his member firms.

While registered with one firm, Joseph signed an employment agreement with another firm that paid him $31,750.47. His responsibilities involved managing relationships with current and prospective clients but did not involve executing securities transactions. Joseph failed to provide prior written notice of this employment to his registered firm.

Additionally, Joseph was a founder, owner, and chief operating officer of a company he formed with his wife to launch a mobile application. He handled various business aspects including working with vendors to develop and market the application. Joseph received a company credit card for business expenses but did not receive a salary. He also failed to disclose this outside business activity to his firms.

Joseph further participated in raising $462,500 through sales of convertible notes to investors who were friends and family for the mobile application business. He assisted with pitching investments and sending offering documents. These activities constituted private securities transactions that required prior written notice to his firms, which Joseph failed to provide.

FINRA rules require registered representatives to provide prior written notice of outside business activities and private securities transactions. These requirements exist so firms can supervise their representatives' activities, identify potential conflicts of interest, and protect customers from unsuitable investments or fraudulent schemes that occur outside firm supervision.

The risks of undisclosed activities include divided attention between multiple business ventures, conflicts of interest that may influence recommendations to customers, and participation in unregistered securities offerings that lack proper disclosures and protections for investors.

For investors, this case illustrates the importance of understanding all business activities in which your financial advisor is engaged. Advisors juggling multiple business ventures may have divided loyalties or conflicts of interest. Investors should ask their advisors about any outside business activities and be cautious about investing in securities offerings promoted by their advisor outside their registered firm.