Texas Securities Commissioner Travis J. Iles on Oct. 23 entered a Disciplinary Order that suspended investment adviser John Michael McDonough for 90 days and fined 212 Advisory Group LLC $15,000 for violating a previous agreement regarding securities regulations.
The Securities Commissioner in 2015 approved McDonough’s registration as an investment adviser representative in Texas with 212 Advisory Group, based in Covington, Ga. The approval required McDonough and the firm to comply with an “undertaking” agreement that restricted his business activities and required 212 Advisory Group to increase its supervision of him.
McDonough’s office is in The Woodlands, a suburb of Houston.
At the time he applied for registration in Texas, McDonough had already been sanctioned by the Financial Industry Regulatory Authority. In 2013, he agreed to the terms of an Acceptance, Waiver and Consent Order (AWC) filed with FINRA.
The AWC order alleged that McDonough violated policies of his then-firm, AXA Advisors LLC, by engaging in outside business activities and participating in four undisclosed private securities transactions. FINRA suspended McDonough for six months and fined him $10,000.
Before registering McDonough in Texas, State Securities Board staff reviewed records used in the AWC. McDonough agreed to abide by the State Securities Board’s undertaking to be registered in Texas.
In an inspection in April 2017, however, State Securities Board staff found that the firm and McDonough violated every provision of the undertaking.
According to the order, 212 Advisory failed to ensure that McDonough did not serve in any supervisory capacity and that he was under the direct supervision of a principal of 212 Advisory.
212 Advisory also failed to perform required compliance reviews by an outside, independent firm, and did not maintain records of supervisory activities required by the undertaking.