← Broker database 2023-11-28
Ian James Prukner Suspended for Undisclosed Outside Business Activity
According to FINRA, Ian James Prukner was fined $10,000 and suspended for 24 months for engaging in an outside business activity as an owner and co-CEO of a company that engaged in e-commerce and lead generation without providing prior written notice to his member firm.
The OBA's customers - including certain firm customers and registered representatives - each paid an up-front fee of at least $40,000 per e-commerce storefront and $4,000 per digital real estate website. Prukner orally discussed the e-commerce storefront component of the OBA with senior compliance personnel at the firm's parent company. The firm then approved the e-commerce storefront component, by which time more than 33 customers had already paid substantial fees to the OBA.
Approximately six months later, the digital real estate component was reported to the firm. By this time, over 200 OBA customers had already purchased over 900 digital real estate websites, and Prukner had earned substantial income from his involvement. Following approval of the e-commerce component, the firm learned that the OBA had been marketed to other firm registered representatives, potentially creating a conflict of interest. The firm warned Prukner to stop this conduct and requested information about firm customers or representatives who had purchased e-commerce storefronts, but Prukner did not provide the requested information.
Failure to provide complete and prior written OBA disclosures undermined the firm's ability to evaluate the OBA and determine whether to restrict or prohibit Prukner's participation. The firm later directed Prukner to stop marketing the e-commerce component, but he continued to market products of the company. Ultimately, the firm made Prukner choose between his OBA and working for it. Prukner chose to continue with his OBA and left the firm after winding down his firm business.
This case, along with related cases against other principals of the same OBA, demonstrates a coordinated failure to properly disclose outside business activities that involved selling expensive products to firm customers and representatives, creating serious conflicts of interest.