Joseph Pratt (CRD#: 719416), formerly a registered representative with Stifel, Nicolaus & Company, Incorporated (CRD#: 793), has been barred by FINRA for alleged insider trading, according to his BrokerCheck report accessed on October 23, 2019.
On September 5, 2019, Joseph Pratt entered into an AWC in which he consented to the findings that he “obtained confidential information that he received from insiders at a public biopharmaceutical company, and misused the confidential information by communicating it to several of his member firm’s customers.” An AWC is a Letter of Acceptance, Waiver, and Consent in which a broker accepts the allegations against them without admitting or denying them, and in which a broker waives their right to appeal the decision. For more information about AWCs, please see our article “What is FINRA AWC?”
Joseph Pratt also “sold away” from his member firm by selling private securities, convincing individuals (including his firm’s customers) to invest a total of $436,000. This is a violation of FINRA Rule 2010. He consented to a bar from the securities industry. On September 24, 2019, FINRA accepted the AWC.
What led to Joseph Pr4att’s bar from the securities industry? He used insider information to invest in, and solicit others to invest in, a pharmaceutical company undergoing clinical trials. According to the AWC:
Company A is a clinical-stage biopharmaceutical company focused on the development of a class of drugs for treating autoimmune and inflammatory diseases. Pratt knew Company A insiders, including a director, a member of the company’s Scientific Advisory Board, and a doctor involved in FDA clinical trials. On numerous occasions, Pratt failed to disclose these relationships to the Firm as required.
Joseph Pratt also invested in a “speculative company,” identified in the AWC only as “Company B.” The AWC states:
Although Pratt received approval to make a one-time personal investment in Company B, Pratt did not provide Wells Fargo with prior written notice or obtain prior approval for his subsequent 18 personal investments. Additionally, Pratt failed to provide prior written notice or obtain prior approval for his solicitation of investors in the private securities transactions in Company B.
A copy of the AWC can be viewed here. Immediately after FINRA accepted the AWC, Joseph Pratt was terminated from his position at Stifel, Nicolaus & Company, Incorporated.
According to BrokerCheck, Joseph Pratt’s history of disclosures begins on July 22, 2009, when a client alleged that “contingent deferred sales charges were not disclosed at the time of purchase.” The client requested $48,547.75, and the matter was settled for the same sum.
Joseph Pratt’s current dispute involves private securities transactions, and does not represent the only time that Joseph Pratt allegedly engaged in violations of FINRA Rule 3040. On November 11, 2014, he voluntarily resigned from Wells Fargo Advisors, LLC after allegedly soliciting clients to invest in private placements not approved by Wells Fargo.
After he moved to his new firm, Joseph Pratt’s troubles did not end, however. On November 15, 2017, one of his former clients from Wells Fargo alleged that Joseph Pratt placed her accounts in “high risk stocks even though she asked that they not be invested in anything that could lose money.” The activity in question allegedly occurred from December 1, 2009 to December 31, 2015. The client requested $62,021.01 in damages, and the matter was settled for $20,000.
Over his 38-year career in the securities industry, Joseph Pratt worked for five broker-dealers:
- Stifel, Nicolaus & Company, Incorporated (CRD#: 793) of Conshohocken, Pennsylvania
- Wells Fargo Advisors, LLC (CRD#: 19616) of Wayne, Pennsylvania
- G. Edwards & Sons, Inc. (CRD#: 4) of Radnor, Pennsylvania
- Fahnestock & Co., Inc. (CRD#: 249) of New York, New York
- H. Newbold’s Son & Co., Inc. (CRD#: 7575)
If Joseph Pratt was your broker or if you have questions about insider trading, don’t hesitate to contact a securities attorney. Call (877) 238-4175 or email firstname.lastname@example.org for your free case consultation with the securities attorneys of Fitapelli Kurta.