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SEC Bars Texas Broker in $850,000 Promissory Note Scheme

David P. Meyer, Esq.

The U.S. Securities and Exchange Commission (“SEC”) recently barred a Dallas-area broker from the securities industry of his involvement in a classic “selling away” scam. The broker, Gregory Todd Froning, is alleged to have raised approximately $850,000 from fifteen of his brokerage customers and advisory clients between 2005 and 2009. Froning raised the funds through an unregistered offering of promissory notes secured by rights to convert to equity interests in Wealth Planning Partners LLC, a financial planning company he owned.

According to the SEC complaint, investors were told that their money would be used to “fund operating expenses and growth of the financial planning company.” However, Froning diverted the funds for personal use, and in typical Ponzi-scheme fashion used some of the funds raised from newer investors to pay “returns” to older investors.

Although the SEC complaint does not mention the firms Froning was associated with by name, a check of his CRD reveals that he worked at LPL Financial Corporation until mid-2009 when he moved briefly to Brewer Financial Services, LLC. Froning is no longer registered with FINRA.

Click here to read the SEC’s complaint.