According to FINRA, Richard A. Hogan was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for participating in private securities transactions in Asia-based funds without providing prior written notice to his member firm.

Hogan participated in transactions where customers invested a total of $630,000 in Asia-based funds by soliciting the investments and directing his assistants to process the investment documentation. The firm did not offer these funds for investment by customers, and the customers' investments were not custodied with the firm. This meant the investments occurred completely outside the firm's supervision and compliance systems.

Making matters worse, Hogan made false representations to his firm. He disclosed on the firm's associate investment monitoring system that he had personally invested in a Hong Kong equity fund but falsely attested that he had not co-invested with customers or solicited others in connection with the investment. In fact, two customers had invested in the same fund based upon Hogan's recommendation prior to his disclosure. This false attestation prevented the firm from properly supervising the transactions and assessing potential conflicts of interest.

Private securities transactions, sometimes called "selling away," are prohibited unless the registered representative provides prior written notice to the firm and, if the representative will receive compensation, obtains firm approval. These rules exist because firms cannot supervise transactions they don't know about, and unsupervised transactions create risks for investors. Without firm supervision, there is no review of suitability, no verification of product legitimacy, no oversight of sales practices, and no firm liability if problems arise.

The 12-month suspension and $10,000 fine reflect the significant amount invested, the involvement of multiple customers, and Hogan's false attestation. This case illustrates the serious consequences of selling away and the importance of conducting all securities transactions through one's firm. Investors should be cautious about investments their brokers recommend that are not held at the broker's firm, as these may lack important regulatory protections.