A Putnam County securities broker has been sanctioned for failing to disclose commissions to investors and for receiving pandemic unemployment funds while still working.
The Financial Industry Regulatory Authority, a private organization that regulates brokers, suspended Martin A. Barth, of Garrison, from associating with anyone in the securities business for 16 months.
Barth’s failure to disclose compensation from a real estate fund he recommended to investors obscured a “potential conflict of interest,” FINRA stated, that could have influenced his recommendations.
Barth consented to the sanctions on March 10, neither admitting nor denying the findings. FINRA published the disciplinary action in its May monthly report.
Barth has worked as a registered broker for 27 years, for firms in New York City, Long Island, the lower Hudson Valley, and California.
From 2018 to 2019, while employed by SW Financial LLC in Melville, Barth recommended investments in a real estate fund that was offered as a private placement, rather than as a sale on a public market. And he encouraged other members of the firm to recommend the fund.
He disclosed that he and the firm would receive a 5% sales commission, and SW Financial would get a 3% dealer-manager fee. But he did not reveal that he was entitled to additional compensation from an affiliate of the real estate fund.
He also did not disclose that the fund’s management company had been unable for years to list the stock on a public securities exchange and that the company was struggling financially.
Twenty-one investors bought shares from SW Financial for $1.6 million, according to FINRA. Barth received more than $30,000, of which more than $23,000 was undisclosed compensation.
FINRA did not identify the fund. But Barth was entitled to compensation from Lodging Fund REIT III Inc., of Fargo, North Dakota. according to a U.S. Securities and Exchange Commission filing in March 2023. On the same day, according to FINRA, Barth voluntarily resigned from SW Financial.
Two months later, FINRA expelled SW Financial from the securities industry for mispresenting private placement offerings, churning customer accounts, and failure to supervise its representatives.
Barth also received $37,000 in Pandemic Unemployment Assistance funds from 2020 to 2021 by telling the New York Department of Labor that he was not working or making more than $504 a week, FINRA says. In fact, he was working for SW Financial and making about $50,000.
FINRA did not impose a monetary penalty, based on a financial condition statement Barth submitted that demonstrated his inability to pay a fine.
According to a FINRA record, Barth works at an Amazon warehouse in Rock Tavern, Orange County.
