The allegations read: Without admitting or denying the findings, johnson consented to the sanctions and to the entry of findings that he failed to notify his member firm of an outside business activity and participated in private securities without receiving approval from the firm. The findings stated that johnson partnered with a friend, who was johnson's customer at the firm, in two outside business entities, participated in both entities as an owner and manager, and informed his member firm of just one of the two businesses. Johnson disclosed to the firm a personal investment in the business as an outside business activity, including a description of what the business was and how it was going to make money. In the description provided, johnson indicated he would not be soliciting investments for the company and that he was not participating in the management of the company. The firm rejected johnson's involvement in the outside activity based on the fact that his friend, a firm customer, was a 50 percent owner and manager of the business. Despite the firm's rejection of johnson's request to participate in the business as an outside business activity, johnson continued to participate in the development of the company, working with his friend, the customer. The findings also stated that at no time did johnson disclose to the firm that he would be involved in soliciting customers to invest in the business. Johnson denied taking part in any private securities transactions in his annual compliance attestation, despite having begun selling the investments in the business. Johnson never received approval from the firm to engage in private securities transactions outside the firm. Later, johnson again sought approval from the firm to participate in the outside business he had previously informed the firm about. At that time, johnson provided limited information about the business and did not disclose to the firm his ownership interest, his role as a manager or that he had solicited and received investments from eleven persons, including four firm customers, totaling $310,000. Because of the limited amount of information disclosed by johnson, the firm did not object to his involvement in the business at that time. However, while investigating an unrelated customer complaint, the firm investigated the matter further. Upon questioning, johnson denied being anything more than an adviser concerning the business' application, but the firm had discovered at least one customer to whom johnson had attempted to sell interest in the business, and terminated him.
