WASHINGTON — The Financial Industry Regulatory Authority has permanently barred a former employee of a broker-dealer and investment advisory firm from the financial markets and ordered him to pay more than $200,000 of restitution to a customer he swindled.
The sanctions against Gabriel N. Smith, from Nashville, Tenn., were disclosed in FINRA's monthly disciplinary actions Tuesday.
FINRA agreed to the sanctions in a "default decision" after Smith repeatedly failed to respond to its requests for information or documents.
Smith, who had been in the securities industry since April 22, 1998 and had served as an investment company and variable contracts products representative at MML Investors Services, LLC from March 23, 2010 until Oct. 19, 2012, until he left. Six days later, the firm reported it had terminated Smith "in connection with the violation of the firm's policy pertaining to the solicitation of loans from customers."
While still at MML Investors on about June 9, 2011, Smith provided a customer of the firm with the opportunity to invest in a short-term municipal bond that would guarantee a 15% return, according to FINRA. Based on Smith's representations, the customer wrote a series of personal checks totaling $200,000 to "Gabriel Smith," the self-regulator said.
On Oct. 22, 2012, Smith gave the customer a personal check for $282,273.51 with a written notation of "Payment for Return of Money." But the check was bad and Smith had closed his account at the Bank of Perry County. Instead of investing the funds, Smith deposited the checks into a bank account under his control and then converted them to his personal use.
FINRA's preliminary investigation unit approached Smith and on Nov. 19, 2012 he provided an initial response to questions about his termination at the firm. The matter was referred to FINRA's District 5 staff in New Orleans for further investigation. Smith failed to respond to several requests for information after that. The letters FINRA sent him were returned marked: "Return to Sender — Unclaimed."
FINRA permanently barred Smith from association with any of its members and order him to pay the restitution. Smith could not be reached for comment.
