Broker Suspended After Raising Funds for Fitness Business

The suspended advisor raised over $10 million for his Texas company without employer approval, FINRA says.

The Financial Industry Regulatory Authority last week suspended and fined a broker accused of raising over $10 million for a fitness company he owns without receiving written approval from the advisory that employed him.

FINRA fined Jeffrey W. Davidson $15,000 and suspended him for 21 months from associating with any FINRA member in all capacities starting Feb. 19.

While working for Equitable Advisors LLC in Austin, Texas, Davidson participated in the private equity offering from May 2021 to January 2022 without providing written notice or receiving written approval from the firm, according to FINRA.

Equitable fired Davidson in January 2022 for engaging in the transaction, according to FINRA’s BrokerCheck, which shows a comment from the now-suspended broker: “Transaction related to firm approved outside business activity. Multiple disclosures made to firm management.”

Although Davidson did not earn commissions in connection with the offering for the fitness company he co-owns and founded with his wife, the couple received about $2.4 million by selling a portion of their ownership interest in the outside company, according to FINRA.

FINRA found that Davidson disclosed his outside business ownership interest to Equitable, which approved it, but that he didn’t have approval to engage in the private offering of ownership units. 

ln connection with the offering, Davidson hired a placement agent, approved a private placement memorandum for distribution to prospective investors, presented a business plan to prospective investors and negotiated the terms of the transaction with investors, FINRA reported. 

The offering raised $10.21 million from 18 investors, including a private equity fund that invested $5 million, FINRA said. 

The other 17 accredited investors invested in the fitness company through a limited partnership; these investors included partners of the private equity fund and employees from the fitness company. Two fitness company employees also were Davidson’s customers at Equitable, according to FINRA.

As part of a settlement, Davidson accepted and consented to FINRA’s findings without admitting or denying them.

FINRA didn’t name Davidson’s outside business in the letter of acceptance, waiver and consent, but its records show that he and his wife co-own group fitness class operator Camp Gladiator, which she founded in 2008 after winning the TV competition “American Gladiators” and serves as CEO.

The Davidsons also founded and co-manage CG Victory, a nonprofit Christian sports camp for children, according to information that the suspended broker provided to FINRA and his bio at his new firm, registered investment advisor Victory Financial Group, where he is listed as founder and chairman.

While FINRA has suspended him as a broker, it and the Securities and Exchange Commission show him listed as an investment advisor.

The sanction letter states that while suspended, Davidson “may not be associated with any FINRA member in any capacity, including clerical or ministerial functions.” He is no longer registered or associated with a FINRA member firm, according to the acceptance, waiver and consent letter, dated Feb. 16.

Davidson has served as an investment advisor at Victory Financial since last year, SEC records show. The firm had more than $143 million in assets under management on May 30.

Davidson didn’t immediately respond to a request for comment sent to his Victory Financial email.

Photo: Adobe Stock

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