FINRA Panel Bars Rep. In $100M EB-5 Dispute

This article was originally published by Law360.com

FINRA Panel Bars Rep. In $100M EB-5 Dispute

By Allissa Wickham

Law360, New York (June 7, 2017, 10:56 PM EDT) — The Financial Industry Regulatory Authority said Wednesday that a hearing panel had barred a California-based representative for taking part in securities transactions, having found that he sold $100 million worth of EB-5 investments but didn’t tell his employer.

Registered representative Jim Seol has been barred by a FINRA hearing panel, the organization announced, with the panel determining that he had sold $100 million in EB-5 investments pushed by his business, Western Regional Center Inc., but neglected to “disclose this activity to his employing firm.”

“FINRA rules and the member firm’s policy required Seol to disclose and obtain prior approval for all outside business activities,” the group said.

Last year, the FINRA’s Department of Enforcement lodged a complaint calling for monetary sanctions against the former Ameriprise Financial Inc. employee for failing to disclose the $100 million EB-5 solar investment business he was running on the side.

According to FINRA, Seol was fired by Ameriprise several years ago when the company found out he had launched Western Regional Center, an investment business aimed at collecting foreign money for certain projects that qualified for the EB-5 visa program, which grants foreign nationals permanent resident status under certain conditions.

Through WRCI, Seol solicited investments from foreign nationals in the California Energy Investment Fund I, which ultimately earned $100 million in investments, FINRA said.

Seol was registered as a general securities representative with Ameriprise in June 1997, and stayed there until he was fired in May 2014, according to the complaint.

Seol was working for Ameriprise when, in September 2011, he formed WRCI and started seeking investors for EB-5 projects, according to the complaint. He made trips to China and South Korea to solicit investors in a project that would eventually fund NextEra Energy Capital Holdings LLC’s Genesis Solar Energy Project, an enterprise that would fall under the EB-5 visa program, according to the complaint.

FINRA said Wednesday that the panel determined that from 2012 to 2014, Seol “intentionally concealed his WRCI activities from his employing firm in multiple instances by repeatedly lying to his supervisor and the compliance examiner.”

“In addition, according to the decision, Seol claimed at the hearing that he did not believe the firm’s policy against outside securities transactions applied to his solicitations through WRCI because he did not understand the limited partnership interests sold to investors to be securities,” FINRA said.

However, the panel decided that the “limited partnership interests” were, in fact, securities, the organization said.

Christopher Robertson of Seyfarth Shaw LLP, who represents Seol, told Law360 that his team “strongly” disagrees with the decision of the panel, and they plan to appeal the ruling to FINRA’s National Adjudicatory Counsel.

“We believe the panel ignored certain key facts in the record and failed to consider numerous established mitigating factors,” Robertson said. “We note that the panel in its initial decision also acknowledged that there was no harm to any investors, and that the issues solely related to disclosure requirements which had no connection to Mr. Seol’s current company or any subsequent business transactions.”

Jim Seol is represented by Christopher Robertson and Lisa K. Haines of Seyfarth Shaw LLP.

The Department of Enforcement is represented by Richard B. Margolies, Joseph E. Strauss and Tiffany A. Buxton.

The case is Department of Enforcement v. Jim Jinkook Seol, disciplinary proceeding number 2014039839101, before the Financial Industry Regulatory Authority Office of Hearing Officers.

–Additional reporting by Kat Greene. Editing by Bruce Goldman.