← Broker database 2021-11-23
Tyrone Maurice Smiles Barred for Undisclosed Vacation Rental Business and False Referral Statements
According to FINRA, Tyrone Maurice Smiles was barred from association with any FINRA member in all capacities for engaging in outside business activities without disclosure or approval from his firm, and for providing false and misleading information to FINRA during its investigation.
Smiles ran an overseas vacation property rental business involving two properties he rented out for short-term stays without disclosing this activity to or receiving approval from his firm. While Smiles worked as a dedicated retirement counselor meeting with retirement plan participants and educating them about corporate retirement plans—a role that did not involve recommending or selling securities—he engaged in additional undisclosed activities that crossed into securities sales.
Without disclosing to or receiving approval from his firm, Smiles referred customers to a registered representative at an affiliated firm to purchase variable annuity contracts. Variable annuities are securities that must be sold in accordance with FINRA rules. The representative sent Smiles checks totaling $118,007.95 in compensation for referring the customers. This compensation arrangement, which essentially functioned as commission sharing for securities referrals, should have been disclosed to Smiles's firm and properly documented on the firm's books and records.
The violations became more serious when FINRA investigated and Smiles provided false and misleading information. In response to written requests and during on-the-record testimony, Smiles falsely maintained that each of the checks he received from the representative related to his vacation property timeshare business rather than to customer referrals for variable annuity purchases. This false explanation was an attempt to conceal his undisclosed compensation for securities-related referrals.
This case demonstrates that even representatives who do not have traditional securities sales roles must disclose outside business activities and cannot receive undisclosed compensation for referring customers for securities purchases. The substantial amount of compensation Smiles received—over $118,000—created a significant financial incentive to make referrals, yet neither his firm nor the customers were aware of this arrangement.
Providing false information to FINRA during an investigation is treated as a serious aggravating factor. Rather than cooperating with the investigation and acknowledging his misconduct, Smiles attempted to mislead investigators with a false cover story about his vacation rental business.
Investors should be aware that compensation arrangements for referrals must be properly disclosed. When retirement counselors or other financial professionals receive undisclosed payments for referring customers to purchase specific products, this creates conflicts of interest that can compromise the quality of advice.