According to FINRA, Nikolay Zotenko was assessed a deferred fine of $10,000 and suspended for one year for drafting and sending retail communications about a private placement investment that contained misleading statements and were not submitted for firm approval.
Zotenko drafted and sent retail communications concerning a private placement investment opportunity to prospective retail customers without submitting the content for firm approval. The communications contained statements that were misleading, unwarranted, and not fair and balanced. After sending the communications without approval, Zotenko submitted the content for approval, and the firm denied approval, informing him that the communications contained several issues, including impermissible promissory statements.
Despite the firm's denial, Zotenko sent the communications using the firm's internal system to additional prospective customers. To circumvent the system's restrictions on unapproved communications, Zotenko falsely affirmed that he did not intend to send the campaign to more than 25 recipients. However, he sent the additional communications in multiple separate batches to 25 recipients at a time, each time falsely indicating the messages were intended for no more than 25 recipients.
The additional communications also indicated that Zotenko's colleague was the sender, even though Zotenko sent all the emails through the firm's system. Zotenko obtained his colleague's permission to send the emails using the colleague's name, but the colleague was not aware Zotenko entered false information into the firm's system or that the firm had previously denied approval of the proposed content.
This conduct demonstrates multiple levels of misconduct. First, Zotenko sent unapproved communications to customers. Second, the communications themselves were misleading and contained impermissible promissory statements. Third, after the firm specifically denied approval, Zotenko circumvented the firm's systems by falsely representing that he was sending to fewer than 25 recipients. Fourth, he misused a colleague's name as the sender. Each layer represents an escalation of the violation.
The deliberate circumvention of the firm's approval system is particularly egregious. Zotenko knew the firm had denied approval, understood why (the communications were misleading), and deliberately found a way around the system to send them anyway. This shows intentional disregard for firm policies and investor protection.
For investors, this case illustrates the importance of being skeptical of investment communications that make promises or guarantees. Promissory statements in investment communications are prohibited because they mislead investors about potential outcomes. Investors who receive investment solicitations should verify they come from the representative's registered firm and should be wary of communications making unrealistic promises. The suspension is in effect from May 16, 2022, through May 15, 2023.
