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Barred Broker Faces Lawsuit Over Sponsored Content

Broker | Financial Advisor | Alex Padalka | February 3, 2020

Finra barred Jim Heafner in July 2019 for failing to appear for testimony in a case related to allegations he was involved in outside business activities without getting his firm’s approval.

In October, a Finra arbitration panel ordered Heafner and Taylor Capital Management, where he had been registered for more than six years, to pay back investors more than $1 million in damages and lawyers’ fees over allegations that Heafner sold them unregistered investments in now-bankrupt 1 Global Capital of Florida. In all, 1 Global raised $287 million from investors before filing for bankruptcy in July 2018.

Now, nine investors who allege having hundreds of thousands of dollars in losses because of Heafner say they chose him because of his regular appearances on Charlotte’s WBT radio and WBTV, WFAE reports. As the appearances were paid for, they were sponsored content, which is “actually an advertisement,” Tony Mecia of the Charlotte Ledger Business Newsletter tells the radio station. The issue is whether the stations are “adequately disclosing that these are paid ads,” according to Mecia.

Some of the segments ran to four or five minutes and in some cases didn’t disclose they were sponsored content, according to Mecia.

“In other cases, it’s in the first seven seconds of the segment, there was a note at the bottom that says ‘Sponsored by Heafner Financial.’ It certainly wasn’t, I don’t think, prominently displayed,” Mecia tells WFAE host Marshall Terry. “And I think that, you know, the question is to a reasonable person — would a reasonable person know that these were paid ads or would they think that it’s editorial content with the full backing of the host and of these stations that have pretty good reputations?”

Heafner at some point had been an underwriter for WFAE, Terry says in the WFAE segment.

The lawsuit doesn’t target the media stations nor Taylor Capital, according to WFAE. The radio segment doesn’t clarify the damages sought.

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