Stoltmann Law Offices and its securities arbitration practice group are investigating Jay Weiser of small-town Mendota, Illinois in LaSalle County in connection with serious allegations involving the sale of notes offered by Woodbridge and notes offered by Future Income Payments (FIP). Both of these entities have been exposed as Ponzi schemes. According to Mr. Weiser’s FINRA BrokerCheck Report, he was discharged with cause from DesPain Financial in connection with allegations he sold Woodbridge and FIP notes to investors. Mr. Weiser was then barred from the securities industry by FINRA on January 17, 2019 when he refused to provide information to FINRA pursuant to FINRA Rule 8210. As we have discussed in previous blogs, there are various reasons why brokers refuse to provide “on the record testimony” (OTR) or provide documents in connection with a FINRA regulatory investigation pursuant to FINRA Rule 8210. Sometimes it is because a broker simply is no longer interested in being licensed and is making a career change and does not want to go through the hassle or the expense of complying with FINRA’s requests. Other times it is because submitting information or testimony to FINRA may do the broker more harm than good. Here, given the allegations made by two clients against Weiser that he sold them notes in Woodbridge and FIP, it is reasonable to conclude Mr. Weiser voluntarily submitted to a lifetime ban from the securities industry because his misconduct is serious.
According to a Notice of Hearing filed the the Illinois Securities Department on November 5, 2018, Mr. Weiser, while affiliated with Weiser Financial and DesPain Financial, sold at least $611,000 in investments in FIP to at least six Illinois residents. According to the publicly available Notice, Mr. Weiser also sold at least $795,000 in Woodbridge notes to at least seventeen Illinois investors. According to the Illinois Securities Department, by selling interests in FIP and Woodbridge, Mr. Weiser violated numerous provisions of the Illinois Securities Law, including Section 12.A, Section 12.F, Section 12.G, Section 12.H, and Section 12.I.
The Notice of Hearing, along with the FINRA action, both find that Weiser failed to disclose these activities to his broker/dealer firm, DesPain Financial. It is critical not to confuse Weiser’s failure to disclose certain activities as if it in any way disclaims potential liability of DesPain or any other entity responsible for supervising Weiser, his firm, and his dealing with investors, because it does not. This failure to disclose does not alleviate the regulatory, statutory, and common law responsibility to supervise the conduct of Mr. Weiser and specifically, if there are “red flags” present that Weiser was conducting investor business with FIP or Woodbridge, the burden would be on DesPain Financial to establish reasonable measures taken in reaction to these “red flags” of potential misconduct.