According to FINRA, Stephen Robert Green was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 30 days for engaging in an outside business activity without providing prior written notice to his member firm.

Green and other individuals formed a company to pool their funds for investment purposes. Although Green did not contribute any funds to the company, he served as its director and president. The company's shareholders, including Green, expected to receive returns from the company's investment activities.

Green was actively involved in the company's business. He attended a meeting where the shareholders agreed to wire $350,000 to an asset manager to invest. The company and the asset manager entered into a Management and Deposit Agreement, and Green conducted due diligence on the asset manager, opened the company's bank account, and facilitated the $350,000 wire transfer from the company to the asset manager's escrow agent. Unfortunately, the asset manager later filed for bankruptcy, likely resulting in a complete loss of the invested funds.

Despite serving in leadership roles and taking an active part in the company's formation, operation, and investment decisions, Green never provided prior written notice to his member firm about these outside business activities. FINRA rules require registered representatives to notify their firms of outside business activities so firms can supervise their representatives and identify potential conflicts of interest or time commitment issues.

Green's role as director and president, combined with his operational responsibilities and expectation of investment returns, clearly constituted an outside business activity requiring disclosure. The due diligence he conducted on the asset manager, his role in opening accounts, and his facilitation of a substantial wire transfer demonstrate significant business involvement beyond a passive investment.

The 30-day suspension reflects that the activities did not directly involve Green's firm customers. However, the case emphasizes that leadership positions in investment entities require disclosure to one's firm, even when the representative does not contribute capital. Investors should inquire about their advisors' outside activities to understand potential conflicts or competing time demands.