Washington

Swanson Financial Services, Inc. and David Swanson - S-21-3252-23-FO01 – Final Order. On June 22, 2023, the Securities Division entered a Final Order against Oregon-based Swanson Financial Services, Inc. (“Swanson Financial”) and David Swanson (“Swanson”), an Oregon resident and the president, chief compliance officer, and sole owner of Swanson Financial. Swanson Financial is registered with the Securities Division as an investment adviser, and Swanson is registered with the Securities Division as an investment adviser representative. The Securities Division entered a Statement of Charges and Notice of Intent to Revoke Registration and Deny Future Registrations (“Statement of Charges”) against Swanson and Swanson Financial in April 2023. The Statement of Charges alleged that the securities administrator in Oregon entered an order revoking the Oregon state investment adviser license for Swanson Financial; revoking the Oregon state investment adviser representative license for Swanson; and barring Swanson from applying for, registering, or renewing any investment adviser, investment adviser representative, broker-dealer, or securities salesperson license in Oregon. The Securities Division concluded that the Oregon order is grounds to revoke the investment adviser registration of Swanson Financial Services, Inc.; revoke the investment adviser representative registration of David Swanson; and to deny any future investment adviser, investment adviser representative, broker-dealer, or securities salesperson registration that the Respondents may seek. The Statement of Charges advised Swanson and Swanson Financial that they had twenty days from the date on which the Statement of Charges was served to submit a request for an administrative hearing, and neither Respondent requested made such a request. The Final Order revokes the investment adviser representative and investment adviser registrations of Swanson and Swanson Financial, respectively, and orders that any investment adviser, investment adviser representative, broker-dealer, or securities salesperson registrations Respondents may seek in the future must be denied. The Respondents may request judicial review of the Final Ord S-21-3252-23-SC01 - Swanson Financial Services, Inc. and David Swanson - Statement of Charges On April 10, 2023, the Securities Division entered a Statement of Charges and Notice of Intent to Revoke Registration and Deny Future Registrations against Oregon-based Swanson Financial Services, Inc. (“Swanson Financial”) and David Swanson (“Swanson”), an Oregon resident and the president, chief compliance officer, and sole owner of Swanson Financial. Swanson Financial is registered with the Securities Division as an investment adviser, and Swanson is registered with the Securities Division as an investment adviser representative. The Statement of Charges alleges that the securities administrator in Oregon entered an order revoking the Oregon state investment adviser license for Swanson Financial and the Oregon state investment adviser representative license for Swanson. The order also barred Swanson from applying for, registering, or renewing any investment adviser, investment adviser representative, broker-dealer, or securities salesperson license in the State of Oregon. The Securities Division concluded that the Oregon order is grounds revoke the investment adviser registration of Swanson Financial Services, Inc., and to deny any future investment adviser, investment adviser representative, broker-dealer, or securities salesperson registration that it may seek. The Securities Division further concluded that the Oregon order is grounds to revoke the investment adviser representative registration of David Swanson and to deny any future investment adviser, investment adviser representative, broker-dealer, or securities salesperson registration that he may seek. Swanson Financial has a right to request a hearing on the Statement of Charges.

Order

Bar (Permanent)

investment adviser, investment adviser representative, broker-dealer, securities salesperson

6/22/2023

Bar Permanent

Oregon Division of Financial Regulation

Borrowed money from five clients, unethical business practices, engaged in an act, practice or course of business that operated as fraud or deceit, omissions/misrepresentations of material fact.

Consent

Bar (Permanent)

All capacties

Permanent

3/1/2023

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$160,000.00

Denial of exemptions

STATE OF OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICES DIVISION OF FINANCIAL REGULATION

Mr. Swanson, acting as president of SF Commercial, sold to clients Promissory Notes which he  personally  guaranteed and which are "securities" as defined by ORS 59.015(19)(a). By selling the Notes to Clients, Mr. Swanson borrowed money from clients of Swanson Financial which constitutes unethical business practices in violation of OAR 441-205-0145(1)(f). Swanson Financial has a duty to reasonably supervise Mr. Swanson's activities and failed to do so, in violation of ORS 59.205(13). Mr. Swanson also failed to amend his license applications when there were material changes in the information contained therein, including civil actions and the addition of an affiliated business entity within 30 days of the occurrence of the material change. By not timely filing amendments to the Form U-4 for Mr. Swanson regarding two civil cases, Mr. Swanson and Swanson Financial violated ORS 59.175(7) and OAR 441-175-0105(2). In connection with the sales of the Notes to clients, Mr. Swanson and SF Commercial directly and indirectly made untrue statements of a material fact and/or omitted to state material facts necessary in order to make the statement made, not misleading in violation of ORS 59.135(2).  Mr. Swanson and SF Commercial engaged in an act, practice or course of business which operated as fraud or deceit upon the Clients, and violated ORS 59.135(3), by sending certain clients form letters containing untrue statements and asking them to sign and return the letters, in an attempt to cover up Mr. Swanson's failure to make certain disclosures to the Clients. Mr. Swanson engaged in non-disclosure, incomplete disclosure or deceptive practices, and therefore engaged in dishonest, fraudulent, or unethical business practices, in violation of OAR 441-205-0145(2) by:  A. failing to adequately disclose to clients: (1) The value of the collateral securing the note and any encumbrances to it; (2) The financial condition of Mr. Swanson and SF Commercial, and their ability to repay the note;  (3) Conflicts of interest caused by borrowing money from clients;   (4) The actual use of the funds they invested;  (5) The risks of the investment.

Consent

Bar (Permanent)

All capacities

permanently

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$160,000.00

Revocation

IN 2002 A DEBT PORTFOLIO COMPRISED OF CORPORATE BONDS WAS PURCHASED FOR THE INCOME NEEDS OF THE CLIENT. A NUMBER OF THE COMPANIES IN THE PORTFOLIO REORGANIZED OR FILED FOR BANKRUPTCY OUTRIGHT, RESULTING IN LOSSES.

$30,000.00

PARTIES TO THE SUIT REACHED SETTLEMENT TO AVOID COSTS OF FURTHER PROCEEDINGS IN FINRA ARBITRATION (CASE NO. 11-03246).ADVISORY AFFILIATE WAS REQUIRED TO PAY $30,000 TO FJ SEIBERT LLC-IOLTA ON NOVEMBER 30,2012. HE WAS RELEASED FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION, AND OBLIGATIONS.

MISHANDLING OF OPTION ORDER

$10,325.00

$4,126.55

MISREPRESENTATION, SUITABILITY, CHURNING, ACCOUNT RELATED NEGLIGENCE. ALLEGED $95M IN DAMAGES.

$95,000,000.00

$40,000.00

PARTIAL RELIEF AWARDED - $40,000. MR. SWANSON DID NOT CONTRIBUTE IN ANY WAY TO THE SETTLEMENT. Not Provided

BREACH OF CONTRACT, BREACH OF FIDUCIARY DUTY,NEGLIGENCE,SUITABILITY,UNAUTHORIZ ED AND EXCESSIVE TRADING.

$505,323.00

$130,000.00

PAINE WEBBER SETTLED FOR APPROXIMATELY $100,000. NO OTHER ACTION HAS BEEN TAK EN. I DID NOT CONTRIUTE MONIES TO THE SETTLEMENT. I DENY ALL ALLEGATIONS OF [CUSTOMER]. DURING THE 8 YEARS I INVESTED IN HIS MONEY OUR INVESTMENT PHILSOPHY NEVER CHANGED. HE ONLY BECOME DISGRUNTLED AFTER A POOR MARKET IN 1994. I MAINTAIN ACCOUNTS WITH HIS TWO SISTERS WITH NEVER A COMPLAINT.

PLAINTIFF ALLEGED BREACH OF FIDUCIARY DUTY,NEGLIGENCE,FRAUD,UNSUITABLE TRADING.

$100,000.00

$43,591.66

PAINEWEBBER SETTLED FOR $43,591.66. NO OTHER ACTION TAKEN. I DID NOT CONTRIBUTE ANY MONIES TO THE SETTLEMENT I DENY ALL CLAIMS AND ALLEGATIONS OF [CUSTOMER] & HER CHILDREN. I BELIEVE HER CLAIMS WERE WITHOUT MERIT.

CUSTOMER DID NOT ALLEGE ANY SPECIFIC WRONGDOING NOR SPECIFY DAMAGES. HE WROTE EXPRESSING DISATISFACTION WITH THE PERFORMANCE OF HIS ACCOUNT.

$14,420.84

$14,420.84

MERRILL LYNCH REIMBURSED THE CUSTOMER IN THE AMOUNT OF 14,420.84 ON NOVEMBER 9, 1988 CUSTOMER [CUSTOMER] WROTE EXPRESSING DISATISFACTION WITH THE PERFORMANCE OF HIS ACCOUNT. WHILE HE DID NOT ALLEGE ANY SPECIFIC WRONGDOING NOR SPECIFY DAMAGES, IT WAS DETERMINED THAT THE CUSTOMER INCURRED A LOSS OF $14,420.84. THIS LOSS WAS DUE, PRIMARILY BECAUSE OF THE OCTOBER, 1987 CRASH.