The Financial Industry Regulatory Authority (FINRA) has permanently barred broker Anthony Tianfeng Cheng from the securities industry following his refusal to participate in an investigation into his business dealings.

www.finra.org/rules-guidance/oversight-enforcement/disciplinary-actions

The Allegations FINRA initiated an investigation into Cheng to determine whether he engaged in undisclosed Outside Business Activities (OBAs). When requested by FINRA to provide information and documentation regarding these activities, Cheng allegedly refused to cooperate, leading to his permanent expulsion from the industry under FINRA Rule 8210.

What This Means for Investors “Outside Business Activities” might sound like a minor compliance issue, but it is actually one of the primary mechanisms through which “selling away” and Ponzi schemes occur. FINRA rules require brokers to disclose any outside business ventures to their employing brokerage firm. This allows the firm to evaluate the activity for conflicts of interest and ensure the broker isn’t pitching unapproved, high-risk, or fraudulent investments to the firm’s clients.

When a broker operates a side business in secret, clients are stripped of the oversight and protection that a registered brokerage firm is supposed to provide. If an advisor ever pitches you an investment opportunity that requires you to write a check to an unfamiliar LLC rather than the brokerage firm itself, do not proceed. If you have lost money in a broker’s undisclosed side-business, the supervising brokerage firm may still be held accountable for failure to supervise through FINRA arbitration.