Sonn Law Group is investigating claims regarding Michael Willard Korson (CRD #2108802, Novi, Michigan). Korson recently submitted an AWC in which he was barred from association with any FINRA member in any capacity. See FINRA Case #2013036033801. Korson was registered with PFS Investments, Inc., from April 1991 until February 2013 until he was permitted to resign in February 2013. According to the Form U-5 filed by PFS Investments to terminate Korson’s registration with the firm “the agent was permitted to resign after information was obtained indicating that the agent was involved in an unapproved outside business activity for which he had solicited at least one investor.” Thereafter, Korson was registered with HBW Securities, LLC, from January 2014 until July 2014.
FINRA found that Korson failed to timely and accurately notify PFS Investments of his outside business activities with My Coupon Genie, Inc. Although Korson eventually provided notice to PFS Investments and revealed that he received compensation from My Coupon Genie, Korson falsely stated when his involvement with My Coupon Genie first began. FINRA also found that Korson participated in private securities transactions, involving My Coupon Genie, with the sale of convertible debentures to firm customers and preferred stock to a non-customer, without providing prior written notice to PFS Investments and HBW Securities.
Upon registering with HBW Securities, Korson disclosed My Coupon Genie as an outside business activity, but then failed to provide prior written notice to HBW Securities of an investment by the non-customer in My Coupon Genie. In addition, FINRA found that Korson misused his outside business’ investor funds by charging personal expenses to his My Coupon Genie’s corporate credit card. FINRA further found that Korson’s wife opened a brokerage account in the name of My Coupon Genie away from PFS Investments, and that Korson traded in the outside brokerage account without disclosing the opening of the account to PFS Investments or disclosing his registration with PFS Investments to the member firm where the account was opened. Instead, Korson falsely certified to PFS Investments that he had disclosed all brokerage accounts held away from the firm. In entering into the AWC, Korson neither admitted nor denied FINRA’s findings.
FINRA Rule 3280, formerly NASD Rule 3040, provides that a broker may only sell securities with the knowledge and approval of his or her firm. When a broker sells securities without processing the order through the firm and without the firm’s permission or knowledge, this violates FINRA rules and is known as “selling away.” Federal and state law define securities broadly. Therefore, even products such as leasing arrangements or promissory notes, may be securities which require firm approval. Selling away often involves investment securities that are in the form of a private placement or other non-public investment.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, PFS or HBW, may be liable for investment or other losses suffered by customers of Korson.
If you were a client of PFS, HBW or Korson, and have suffered investment losses or financial irregularities or invested in promissory notes or limited partnership agreements, please contact Sonn Law Group to explore your legal options, Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies. To learn more, please call us at 844-689-5754 or complete our “contact form.”