According to FINRA, Nathan Marek Plumb was assessed a deferred fine of $10,000 and suspended for four months for engaging in undisclosed outside business activities and participating in undisclosed private securities transactions.
The findings revealed that before associating with his member firm, Plumb submitted an OBA disclosure form to the firm disclosing his role as a board member of a mutual fund company, and the firm approved. Later, Plumb's role with the fund company expanded and he began working as chief financial officer and treasurer. However, Plumb did not disclose these new roles to the firm. In addition, Plumb began providing consulting services to a registered investment advisory firm and the investment advisor to the fund company pursuant to a consulting agreement. Plumb provided economic research, marketing support, and financial analysis to the investment advisory firm. Plumb did not disclose to the firm his role with the investment advisory firm until nearly two years after starting. The firm subsequently denied Plumb's request to work for the investment advisory firm. Notwithstanding this denial, Plumb continued to work for, and receive compensation from, the investment advisory firm throughout his association with the firm. Further, Plumb incorrectly attested on annual compliance questionnaires submitted to the firm that he had disclosed all OBAs.
The findings also revealed that Plumb participated in undisclosed private securities transactions. While associated with the firm, Plumb was approached by and assisted individuals in purchasing mutual fund shares directly from the fund company. These individuals purchased approximately $387,000 of mutual fund shares directly from the fund company. Plumb assisted these individuals with their purchases by meeting with them to discuss their investments, completing the paperwork required to purchase the mutual fund shares, and advising them on how to send payment to the fund company. Plumb did not receive any commissions or other payments for his role in the transactions, though he was affiliated with the fund company as a member of the board and the CFO and treasurer.
This case involves multiple serious violations that collectively demonstrate a pattern of engaging in securities and investment-related activities outside firm oversight. The progression of violations shows Plumb repeatedly failing to disclose activities, continuing activities after firm denial, and lying on compliance questionnaires about his disclosures.
The first set of violations involves Plumb's expanding roles with the mutual fund company and investment advisory firm. While he initially disclosed his board membership, he failed to update the firm when his role expanded to CFO and treasurer—positions involving significantly greater responsibility and time commitment. Similarly, when he began consulting for the investment advisory firm, he failed to disclose this activity for nearly two years. When he finally did disclose it and the firm denied approval, he continued the activity anyway and continued receiving compensation. This demonstrates not just a failure to disclose but a willful disregard for firm decisions about outside activities.
The false attestations on annual compliance questionnaires compound these violations by showing Plumb was actively concealing his outside activities rather than simply being careless about disclosure requirements. Each year when he falsely attested that his OBA disclosures were accurate and complete, he was lying to the firm to avoid scrutiny of his outside activities.
The undisclosed private securities transactions are particularly serious because they involved Plumb facilitating purchases of approximately $387,000 in mutual fund shares. While Plumb did not receive direct commissions, he benefited from these transactions in his capacity as a board member, CFO, and treasurer of the fund company. These sales increased assets under management for the fund, which would benefit the fund company and potentially Plumb in his leadership roles.
The fact that Plumb met with individuals to discuss investments, completed purchase paperwork, and advised them on how to send payment demonstrates active involvement in securities transactions that should have been disclosed to and supervised by his firm. The individuals purchasing shares may not have understood whether Plumb was acting on behalf of his member firm or in his separate capacity with the fund company, creating confusion and potential liability for the firm.
The four-month suspension and $10,000 fine reflect the serious and multifaceted nature of Plumb's violations. His conduct demonstrated a pattern of engaging in investment-related activities outside firm oversight, continuing activities after firm denial, and repeatedly lying on compliance forms. This pattern raises serious questions about Plumb's integrity and willingness to comply with regulatory requirements.
