According to FINRA, Michael G. Ferrera Jr. was assessed a deferred fine of $15,000 and suspended for two years for engaging in an outside business activity without providing prior written notice to his firm and for knowingly making false and misleading statements to the firm and FINRA about the activity.
The findings revealed that Ferrera engaged in an outside business activity with one of his firm's customers, a recently widowed elderly woman who was having trouble managing her affairs. Ferrera purported to provide estate-management services including lawn care, house maintenance, personal organization, and "concierge services" that could include almost anything the customer might want or need. Ferrera charged the customer $20,000 for five years of such services and began performing limited services organizing her mail and personal papers after depositing her check.
Shortly after Ferrera deposited the check, the customer's bank investigated and reversed the transaction. The customer then complained in writing to both the firm and FINRA, prompting investigations by both organizations. During these investigations, Ferrera knowingly gave false and misleading answers suggesting his estate-management activities amounted to an established business when, in reality, the customer was his first and only estate-management client.
Specifically, Ferrera falsely stated to the firm that he began performing estate-management services about six months before depositing the customer's check, that he had earned $50,000 in total from his estate-management activities, and that he had provided similar services for two individuals in the past. He completed the firm's standard outside business activity disclosure form reiterating these false statements and made similar false statements to FINRA during an examination. Ferrera knew that each of these statements was false and misleading.
The case involves two separate violations, each serious in its own right. First, Ferrera engaged in an outside business activity with a firm customer—particularly a vulnerable elderly widow—without providing prior written notice to his firm. This deprived the firm of the opportunity to evaluate whether the activity was appropriate, presented conflicts of interest, or should be prohibited. The requirement to disclose outside business activities exists precisely to prevent registered persons from exploiting relationships with customers for personal gain outside the firm's oversight.
Second, and perhaps more seriously, Ferrera lied repeatedly to both his firm and FINRA about the nature and extent of his outside activities. These false statements were not innocent mistakes—Ferrera knowingly misrepresented facts to make it appear that he had an established estate-management business when the elderly customer was his first and only client. These lies were designed to make his conduct appear less problematic than it actually was and to mislead regulators and his firm about the true nature of his exploitation of the customer relationship.
The two-year suspension is appropriate given the serious nature of the misconduct. Taking advantage of a vulnerable elderly widow, charging her $20,000 for services, and then lying about it repeatedly demonstrates poor judgment and dishonesty that makes Ferrera unsuitable for a position of trust in the securities industry. The customer's bank ultimately protected her by reversing the transaction, but Ferrera's conduct and subsequent dishonesty reveal character issues that warrant a substantial suspension.
To his credit, Ferrera later gave truthful testimony in the matter about the issues he previously misrepresented, which likely factored into him receiving a suspension rather than a bar. Nonetheless, investors should be wary of any registered person who has demonstrated a willingness to exploit vulnerable customers and lie to regulators.
