Prospera Financial’s Michael Tretheway Sanctioned by Regulators

Michael Tretheway (CRD# 2964914[1]), a broker registered with Prospera Financial Services, allegedly made an unapproved outside investment, according to his Financial Industry Regulatory Authority (FINRA) BrokerCheck profile. Accessed on July 19, 2023, this record notes that the Fort Lauderdale-based financial professional was sanctioned in May 2023 by the Massachusetts Securities Division.

Massachusetts Regulators Sanctioned Tretheway

On May 31, 2023, the Massachusetts Securities Division released an order sanctioning Mr. Tretheway. As part of the order, the regulator placed certain conditions on his registration as a broker and investment adviser “due to recent disclose incidents.” As a result of these unspecified incidents, he was placed on a heightened supervision plan which included a quarterly review of his customer accounts, a written and signed statement indicating that he has not conducted outside business activities, and a review of bank statements in his name or under his control.

Wells Fargo Fired Michael Tretheway over Unapproved Outside Investment

The circumstances underlying Mr. Tretheway’s sanction by the Massachusetts Securities Division may relate to his termination from Wells Fargo several months prior. On March 10, 2023, the firm disclosed that it fired him over allegations involving his disclosure, during an investigation, “that he made personal outside investment without prior approval by the Firm.”

Understanding FINRA’s Outside Business Activity Rule

FINRA rules prohibit brokers like Mr. Tretheway from participating in outside business activities unless they adhere to certain conditions. Specifically, FINRA Rule 3270 states that FINRA-registered persons may not engage in business activities outside the scope of their relationship with their member firm, “unless he or she has provided prior written notice to the member, in such form as specified by the member.”

Rule 3270 establishes further that when member firms receive such notice from a broker, they must determine whether the proposed activity would conflict with the broker’s responsibility to the firm and/or its clients. The firm must also “keep a record of its compliance with these obligations with respect to each written notice received and must preserve this record.” As such, brokers who engage in undisclosed outside business activities may also violate industry rules concerning the maintenance by member firms of accurate books and records.

Misrepresentation Allegations Settled for 6 Figures

On April 9, 2018, an investor filed a dispute alleging that Mr. Tretheway misrepresented material information relating to certain recommendations that the customer liquidate annuities, including the tax ramifications of these liquidations. In 2019 his member firm settled the dispute for $135,000.

Understanding FINRA Rule 2020

FINRA Rule 2020[2] forbids the effectuation of securities transactions using “any manipulative, deceptive or other fraudulent device or contrivance.” In other words, this rule forbids brokers from misrepresenting material facts regarding the investments they recommend. Generally speaking, a “material fact” is information that would form a significant consideration for a reasonable investor evaluating a potential investment or strategy: examples include the risk associated with an investment, its liquidity, its potential returns, or fees and charges stemming from the transaction.

Michael Tretheway Also Associated with Morgan Stanley

Tretheway started working as a broker in 1997, when he registered with Merrill Lynch’s office in Boston, Massachusetts. In the years since, he worked at firms including Morgan Stanley[3] and Wells Fargo. He joined Prospera Financial Services in April 2023, registering with the firm’s offices in Boston, Massachusetts and Fort Lauderdale, Florida. He has completed four securities industry exams, including one state securities law exam and three general industry/products exams.

Did You Lose Money Investing?

Current or former customers of Michael Tretheway with concerns about their investments may be able to file a FINRA arbitration claim to recover losses. Contact MDF Law if you were unaware of the risks associated with your investments, if your investments were not suitable for your profile, if your broker did not disclose fees or conflicts of interest, or if your account was poorly diversified. Our clients only pay a fee if they win their case, and our attorneys are currently offering free consultations nationwide. Call 800-767-8040 to discuss your case today.