FINRA Suspends Ex-Woodbury Advisor

The Financial Industry Regulatory Authority has suspended a former broker affiliated with Signator Investors Inc. and Woodbury Financial for a period of 10 months for allegedly “engaging in a pattern of misconduct” that included taking loans from firm customers, engaging in undisclosed outside business activities, and making false attestations in firm compliance questionnaires.

Beginning in 2008 until his termination from Woodbury in 2016, David Albert Ross allegedly accepted five loans from four firm customers totaling $89,000 and engaged in two undisclosed outside business activities, including serving as board director of a firm customer.

While Ross worked at Signator in 2008, he allegedly accepted a $20,000 loan from a firm customer, and the following year, borrowed $27,000 in two loans from another customer. Ross did not disclose these loans to Signator as required, and when asked in firm compliance questionnaires if he had ever borrowed money from a client, he allegedly answered no.

While he was associated with Woodbury, which had a similar policy against borrowing from firm customers, Ross allegedly borrowed $31,000 from a customer in 2011 and then borrowed an additional $11,000 from another customer in 2015.

FINRA claims that Ross falsely certified on six Woodbury compliance questionnaires over five years that he understood and complied with Woodbury’s policy that prohibited registered representatives from borrowing funds from firm clients.

In 2010, while at Signator, Ross provided consulting services to a customer and accepted a payment of $1,500, but never disclosed the outside business to Signator. In addition, between 2011 and 2016, he earned nearly $50,000 in compensation serving on the board of an unnamed corporation, which had been his customer since 2002.

The regulator claims that Ross violated FINRA Rules 3240, 3720, and 2010. FINRA Rule 3240 prohibits brokers from borrowing funds from clients unless the loan is permitted by the member firm’s written policies and procedures and is approved in advance by the firm in writing.

FINRA Rule 3270 prohibits registered persons from engaging in outside business activities unless they provide prior written notice to the member firm, and FINRA Rule 2010 requires registered representatives to observe high standards of commercial honor.

FINRA suspended Ross for 10 months, but did not impose any monetary sanctions after he demonstrated an inability to pay.

Ross signed FINRA’s letter of acceptance, waiver and consent without admitting or denying the findings. He is not currently associated with any FINRA member firm.

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