FINRA Sanctions Former Broker for Undisclosed Private Equity and Securities Activities
From the desk of Jim Eccleston at ÍøÆسԹÏ
FINRA has sanctioned former registered representative Thomas A. Rapp for engaging in undisclosed outside business and private securities transactions while associated with M Holdings. The enforcement action stems from a Letter of Acceptance, Waiver and Consent (AWC) Rapp submitted under FINRA Rule 9216, resolving the matter without admitting or denying FINRA’s findings.
According to the AWC, between June 2021 and July 2023, Rapp co-founded a private equity fund and served as its chief executive officer and managing partner. Throughout this period, he failed to provide his firm with prior written notice of his involvement, violating FINRA Rules 3270 and 2010. Additionally, Rapp participated in a private offering of limited partnership interests in the fund without notifying M Holdings, in violation of FINRA Rules 3280 and 2010.
The offering, conducted under Regulation D of the Securities Act of 1933, raised over $11 million from roughly 15 investors — several of whom were Rapp’s clients at M Holdings. Rapp directly communicated with prospective investors, signed subscription agreements, and executed regulatory filings related to the offering. Although he did not earn commissions from these transactions, the AWC states that his participation outside of the firm’s oversight triggered regulatory action.
As a result, FINRA imposed a 21-month suspension from associating with any FINRA member in any capacity and levied a $20,000 fine against Rapp. The fine becomes payable upon any future reassociation with a FINRA member or if he applies for relief from statutory disqualification. Rapp also waived any claim of financial hardship to avoid monetary sanction.
While Rapp is not currently associated with a FINRA member, he remains subject to FINRA’s jurisdiction under Article V, Section 4 of its By-Laws. The sanctions will take effect on a date determined by FINRA.
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Tags: eccleston, eccleston law, finra
