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FINRA Suspends Bennett Zamani After Alleged Outside Business Activity

Jun 10, 2022 Outside Business Activities

Bennett Zamani (CRD #: 6198730), a formerly registered broker, has been suspended from FINRA, according to his BrokerCheck record, accessed on June 2, 2022. If you want to know more about Bennett Zamani’s conduct as a broker, keep reading.

Suspension from FINRA

On May 16, 2022, Bennett Zamani was suspended by FINRA for allegedly failing to disclose an outside business to his firm, Morgan Stanley, between January 2017 and April 2020. 

A Letter of Acceptance, Waiver & Consent (AWC) alleges that, during this period, Bennett Zamani owned and operated a company offering subscription-based investment content accompanied by a YouTube channel, blog, website, and newsletters. Bennett Zamani allegedly made $360,000 from this endeavor.

The AWC alleges that Bennett Zamani violated FINRA Rule 2210 through the following actions:

  • Failing to obtain firm approval for retail communications related to this outside business activity.
  • Failing to disclose his relationship with Morgan Stanley to his subscribers.
  • Communicating to investors in a way not fair or balanced by failing to provide a reasonable basis for investors to evaluate the securities he described and by failing to explain investment terms.
  • Making promissory, unwarranted, and misleading statements regarding investments, including projections of investment performance.
  • Publishing subscriber testimonials on his company’s website and making recommendations of securities without the required disclosures. In particular, Bennett Zamani allegedly failed to disclose that he owned five different exchange-traded funds (ETFs) that he recommended in his newsletters.
  • Failing to provide disclosures and information required to accompany performance data for securities, specifically ETFs. Bennett Zamani allegedly published performance information and price charts on ETFs without including the average annual total returns across one-, five-, or ten-year periods, an offer of a prospectus, or a performance legend, as well as other required information.

Additionally, the AWC alleges that Bennett Zamani caused Morgan Stanley to keep inaccurate books and records by communicating with clients outside of the firm-approved methods. From June 2018 through April 2020, Bennett Zamani allegedly sent 77 business-related text messages to firm clients on his personal cell phone, in violation of firm policy regarding the use of unapproved personal devices.

These text messages allegedly contained sensitive client information including driver’s license information, dates of birth, and social security numbers.

The AWC concludes that these allegations violate FINRA Rules 3270; 2010; 2210(b), (d), and (g); and 4511, as well as Section 17(a) of the Securities Exchange Act.

FINRA Rules 3270, 4511, and 2010

FINRA Rule 3270 requires brokers to disclose any business activities they engage in outside of their role at their member firm. This disclosure includes what role they will play in the transaction and what compensation they will receive.

FINRA Rule 4511 requires firms to maintain accurate and up-to-date books and records, including client communications.

Violations of these and other FINRA regulations frequently constitute automatic violations of FINRA Rule 2010, which requires brokers to maintain high standards of professional honor.

FINRA Rule 2210

FINRA Rule 2210 regulates how FINRA members communicate with the public. Sections (b), (d), and (g) require, respectively:

  • Firm approval of retail communications and filing with FINRA’s Advertising Regulation Department
  • That member communications must be based in good faith and fair dealing and provide a sound basis for investors to evaluate securities, and must not be misleading, missing information, or make predictions about investments
  • That any violation of SEC rules regarding communications be considered an automatic violation of Rule 2210

Section 17(a) of the Securities Exchange Act

Section 17(a) of the Securities Exchange Act forbids the misrepresentation and omission of information in order to deceive or defraud consumers, as well as other means of engaging in fraudulent securities transactions across state lines.

Sanctions

Bennett Zamani consented to the following sanctions:

  • $27,500 fine
  • 14-month suspension from associating with FINRA members in all capacities

His suspension began on May 16, 2022, and will end on July 15, 2022.

You can read the full AWC here.

Discharge from Morgan Stanley Wealth Management

On April 30, 2022, Bennett Zamani was fired from Morgan Stanley following allegations he executed unauthorized trades in a client’s account, communicated with said client on a non-firm communication platform, and engaged in unauthorized outside business activity related to investment.

Background Information

Bennett Zamani has passed the following exams:

  • Series 66 - Uniform Combined State Law Examination
  • Series 7TO - General Securities Representative Examination
  • SIE - Securities Industry Essentials Examination
  • Series 7 - General Securities Representative Examination
  • Series 56 - Proprietary Trader Qualification Examination

He has worked for Morgan Stanley (CRD#:149777) and T3 Trading Group (CRD#:154431).

Kurta Law Can Help

If you worked with Bennett Zamani and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.