DeWaay accepted the fine and a 10-day suspension, but did not admit any wrongdoing, according to InvestmentNews.
The FINRA fine is the latest in a series of setbacks for DeWaay, who built an elaborate financial services campus in Clive, then saw it returned to lenders in the wake of the collapse of the real estate market and controversies that stemmed from the promotion of private placements in real estate investment trusts and oil-and-gas exploration firms. Read a related story
In a filing in federal court in Delaware, DeWaay lawyers said claims resulting from the sale of such investments could force him to file for bankruptcy. It was estimated that DeWaay and affiliated brokers sold $46.3 million in private placements to 590 clients
Many claims were dropped as a result of two class-action lawsuits that were filed in January 2012 in Decatur County District Court. Those cases were consolidated for settlement purposes with most investors being prevented from filing individual claims.
In June, a Decatur County judge approved a $3 million settlement of the lawsuits, which claimed DeWaay and his brokers did not perform adequate due diligence before promoting the investments. Under the terms of the settlement, DeWaay would pay $925,000 and insurance companies would pick up the balance. The settlement has been appealed. Read about the settlement
Prior to the lawsuits, DeWaay settled other claims before FINRA that arose from sales of investments in an Idaho-based real estate investment trust. DeWaay and his companies also were sued in Texas by investors who lost money in oil-and-gas leases offered by a now bankrupt firm.
In the most recent case, FINRA alleged DeWaay was trying to sell some of his own shares in DFN Partners LLC, the holding company that owned his DeWaay Financial Network LLC broker-dealer, and misrepresented his company to investors in a June 2009 conference call, InvestmentNews reported.
He claimed his firm had enjoyed a 47 percent surge in revenue at that point in 2009, and expected a "significant increase" for the full year, claims FINRA said were unsubstantiated.
According to an audit of DeWaay's personal and business finances that was conducted for the Decatur County lawsuits, DFN Partners showed a $239 profit in 2007, the only year it operated in the black from 2007 to 2011. The holding company's financial statements showed that sales ranged from nearly $8.5 million in 2007 to $16.7 million in 2010. It paid commissions of $6.8 million to its brokers in 2007 and $13.2 million in 2011. As a percent of sales, commissions varied from nearly 54.5 percent in 2009 to 84 percent in 2011.
DeWaay notified FINRA in November that he would not renew his broker-dealer registration. He continues to provide investment advisory services. The suspension is scheduled to run from Sept. 3 to Sept. 16.