FSC Securities Corp has reached a $5.7 million settlement with the Montana Securities Commissioner after a broker, Barry Hartman, allegedly recommended and sold investments in Invizeon. These activities were illegal and many investors were harmed by his misconduct. The company was listed as a software business that develops platforms to manage information from sensing and detection technology. Hartman allegedly peddled illegal investments in Invizeon, without the knowledge of FSC, leaving his clients unable to access their investment proceeds. Hartman was a beneficial owner and director of Invizeon at the time. The company closed in 2015, and investors lost their entire investment as a result. Twelve clients of Hartman’s had purchased the investment, many of them in the Missoula, Montana area. 26 clients were said to have held bad investments based on their financial objectives, age and needs.
This tactic is sometimes referred to as “selling away,” and is when a broker sells an investment that is not offered or held by his investment firm. He does this so he can keep the commissions for himself, and not have to share them with his member firm. It is against securities laws and internal firm rules. For this, FSC will pay more than $1.3 million in restitution, including $1.1 million in principal and more than $230,000 in interest. The company will offer more than $1.4 million in rescission, including almost $1.2 million in principal and $130,000 in interest.
According to Mr. Hartman’s BrokerCheck report with the Financial Industry Regulatory Authority (FINRA), Barry Hartman was previously registered with The Prudential Insurance Company of America in Newark, New Jersey from June 1985 until December 1993, Pruco Securities Corp in Newark from June 1985 until November 2000, Raymond James in St. Petersburg, Florida from October 2000 until February 2002, and FSC Securities Corp in Missoula, Montana from February 2002 until March 2015. He has 21 customer disputes against him, four of which are pending, and one criminal disposition. He has been permanently barred from the industry.
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