According to FINRA, David Richard Geake was barred from association with any FINRA member in all capacities for participating in a private securities transaction by soliciting elderly investors to pledge approximately $15 million of securities as collateral to guarantee a $2.5 million loan on behalf of a startup company without providing written notice to his member firm.

Geake personally invested $100,000 in the company and was also a member of its Board of Directors. He assured an elderly couple that their risk of investment loss was minimal and structured the transaction, facilitating the paperwork on their behalf. The pledge of securities as collateral for the loan was an offer of a security, and the couple received shares of the company's common stock in exchange for their guarantee.

The company fully defaulted on the bank loan and closed its business, and the bank called for the loan to be paid in full. As a result, the couple were required to repay the entire $2.5 million bank loan with interest. Although neither investor were firm customers, the firm's policies prohibited registered representatives from engaging in any private securities transaction without prior express written permission.

Geake also incorrectly attested to the firm on multiple annual compliance questionnaires that he had not participated in any private securities transactions. This case illustrates the dangers of private securities transactions, particularly when they involve elderly investors and representatives who have conflicts of interest through their own investments and board positions. The couple's loss of $2.5 million demonstrates the severe harm that can result when representatives bypass firm supervision.