Neal C. Moon Under Investigation for Improper Sales of Private Securities

Meyer Wilson is now investigating potential claims of improper sales of private securities by Neal C. Moon (CRD# 3271716).

Moon was a registered broker from 1999 to 2015, according to the BrokerCheck Report from the Financial Industry Regulatory Authority (FINRA). He is not currently registered.

Moon held three separate registrations with Broker Dealer Financial Services Corp. of West Des Moines, Ia. from October 1999 to October 2007. He then worked with Ameriprise Financial Services Inc. of Plano, TX. from October 2007 to March 2009. His most recent registration was with Waddell & Reed in Dallas from October 2009 to October 2015.

Moon’s FINRA report shows one customer complaint, filed in February 2014. The customers alleged Moon misrepresented the gains on a particular investment as long-term capital gains, not ordinary income. This misrepresentation allegedly resulted in consequences for the customer’s tax liability and Medicare premiums.

The customers also alleged that he failed to inform them about a charge that was applicable to their managed allocation portfolio. This complaint was settled in April 2014 for just over $16,900.

Currently, Moon is subject to a disciplinary proceeding initiated by FINRA in July 2016. The complaint alleges that between February 2012 and August 2015, he and his wife, Natalie Moon, participated in several private securities transactions without properly disclosing those transactions to their firm, Waddell and Reed.

Moon allegedly solicited firm customers and non-customers to invest in three different outside ventures. These transactions involved the investment of a total of $2.6 million from six different investors. FINRA alleges Moon failed to submit the required written disclosure notice of these private securities transactions to Waddell and Reed.

Moon resigned from Waddell & Reed in September 2015, admitting to involvement in an undisclosed private securities transaction. The disciplinary action against him is still pending.

Private securities like the ones Moon is facing disciplinary action over are subject to a different set of rules from those governing publicly-traded securities. These private securities, also referred to as private placements, are non-public offerings that are often used by small businesses to raise capital.

Brokers like private placements because their sales often produce high commissions. But for the investor, they come with a unique set of risks and potential for broker abuse.

Private securities are considered illiquid. Since they are not traded publicly, there may not be much of a market for them – and investors who wish to sell them later may end up stuck with them for lack of a buyer. These private securities are also not subject to the same regulations as publicly-traded securities, known as Regulation D and enforced by the Securities and Exchange Commission (SEC).

Even when sales of private placements comply with applicable laws, they still may not be suitable for certain investors. Due to the unique risks associated with private securities, prudent brokers must be selective about the investors they sell these securities to. These securities are considered more suitable for “accredited investors,” those who meet certain requirements in terms of assets, income, and investment knowledge and experience.

If you believe you have been harmed by an improper sale of private securities, the investment attorneys at Meyer Wilson are ready to help. We have helped many investors recover millions of dollars in lost funds. For a free consultation, give us a call or fill out our online request form.

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