According to FINRA, Melton Weaver III was fined $10,000 and suspended for 24 months for engaging in an outside business activity as an owner and CFO of a company that engaged in e-commerce and lead generation without providing prior written notice to his member firm.

The OBA's customers - including certain firm customers and registered representatives - each paid an up-front fee of at least $40,000 per e-commerce storefront and $4,000 per digital real estate website. Another owner associated with the firm orally disclosed the e-commerce storefront component to the firm and informed it that Weaver was involved. Even though Weaver never disclosed any component of his OBA to the firm himself, it approved the e-commerce component. By this time, more than 33 customers had already paid substantial fees to the OBA.

Later, the digital real estate component was reported to the firm. By this time, over 200 OBA customers had already purchased over 900 digital real estate websites, and Weaver had earned a significant amount from his involvement. Following approval of the e-commerce component, the firm learned that the OBA had been marketed to other firm registered representatives, potentially creating a conflict of interest. The firm warned Weaver to stop allowing his OBA to market its products this way and requested information about firm customers or representatives who had purchased e-commerce storefronts, but Weaver did not provide the requested information.

Weaver's failure to provide complete and prior written OBA disclosures undermined the firm's ability to evaluate the OBA and determine whether to restrict or prohibit his participation. Subsequently, the firm directed Weaver to stop allowing his OBA to market the e-commerce component, but Weaver continued to allow his OBA to market products of the company. Later, the firm instructed Weaver to choose between his OBA and working for the firm. Weaver continued with his OBA but did not voluntarily resign, so the firm ultimately discharged him.

This case is part of a pattern involving multiple principals of the same OBA who all failed to properly disclose their outside business activities, which involved selling expensive products to firm customers and representatives.