According to FINRA, Robert Anthony Daly was barred from association with any FINRA member in all capacities on October 8, 2024, after refusing to produce information and documents requested by FINRA during an investigation that originated from a regulatory tip related to possible undisclosed private securities transactions.
Private securities transactions, often called "selling away," occur when a broker conducts securities transactions outside the scope of their employment with their firm. These transactions are called "selling away" because the broker is selling securities away from the firm's supervision and control. Such transactions must be disclosed to the firm, and in many cases, the firm must approve them before the broker can participate.
Selling away is one of the most dangerous forms of broker misconduct from an investor's perspective. When brokers engage in undisclosed private securities transactions, investors lose the protections that come with firm supervision, including due diligence on the investment, oversight of sales practices, and firm liability if something goes wrong. Many high-profile Ponzi schemes and fraudulent investment scams have been perpetrated through selling away arrangements.
The fact that FINRA's investigation originated from a regulatory tip suggests that someone—possibly an investor, another broker, or a firm compliance officer—reported concerns about Daly's activities. FINRA sought information and documents to investigate whether Daly had engaged in undisclosed private securities transactions, but he refused to cooperate.
By refusing to provide information, Daly prevented FINRA from determining whether he engaged in selling away, what investments were involved, how many investors were affected, and whether investors lost money. This obstruction resulted in a permanent bar from the securities industry.
Investors should be extremely cautious if a broker approaches them about investment opportunities that are not offered through the broker's firm. Before investing in any private placement, limited partnership, or other alternative investment recommended by a broker, investors should verify that the broker's firm has approved the transaction and that the investment has undergone appropriate due diligence.
Red flags for selling away include: investments not reflected on your brokerage account statement, requests to make checks payable to anyone other than your brokerage firm, investments in entities where the broker has a personal interest, and pressure to invest quickly without thorough documentation.
Daly's refusal to cooperate with FINRA's investigation suggests he had something to hide regarding his private securities activities. This bar protects investors from potential harm by ensuring Daly cannot continue operating in the securities industry.
