According to FINRA, Matthew James Mangini was assessed a deferred fine of $10,000 and suspended for six months for participating in unapproved private securities transactions by recommending and facilitating investments in alternative investments through a registered investment advisory firm.

In his capacity as an investment advisor representative, Mangini recommended and facilitated investments in private securities offerings of alternative investments through a registered investment advisory firm. The transactions raised $644,000 from investors, all of whom were customers at his member firm. Mangini participated by recommending and facilitating the investments, including meeting with investors to solicit and discuss the investments, providing them with marketing materials, and assisting them with completing subscription agreements and other documentation.

Mangini's clients paid advisory fees to the registered investment advisory firm on the assets held in their advisory accounts, including the alternative investments that he recommended and facilitated. However, Mangini did not provide his firm with prior written notice of his participation in the sale of alternative investments through the registered investment advisory firm or obtain the firm's written approval to sell those investments.

This case demonstrates a common violation where registered representatives use their dual registration status with investment advisory firms to engage in securities transactions away from their broker-dealer firm without proper notice. Even though the transactions occurred through a registered investment advisory firm, FINRA rules require representatives to notify their broker-dealer firm of such activities, particularly when the customers are broker-dealer customers. This enables the firm to supervise for conflicts of interest and ensure the transactions are appropriate.

Investors should be aware when their financial professional is recommending investments through a separate advisory platform and should understand the fee structures and potential conflicts involved.