The Financial Industry Regulatory Authority imposed a $15,000 fine and suspended for 21 months a former broker who raised over $10 million for a fitness company that he and his wife owned.
Jeffrey W. Davidson, who is based in Austin, Texas, had approval from his former firm, Equitable Advisors, for his ownership in the fitness company but did not have authorization for the fundraising, Finra said. As part of the capital raise, which took place between 2021 and 2022, Davidson and his wife earned $2.4 million by selling a portion of their equity in the company, according to the regulator.
Davidson violated Finra’s rule against unapproved private securities transactions and its catch-all Rule 2010 requiring high standards of conduct, according to the settlement. His suspension ends November 2025, according to BrokerCheck.
Finra did not identify the company or co-founder by name, but BrokerCheck records show that in 2008 Davidson and his wife started Camp Gladiator, a workout and diet program with outdoor group classes in Austin. The name references the former television show “American Gladiators”, a fitness competition his wife won. The couple also operates a Christian sports camp, according to BrokerCheck.
As part of the fundraising, Davidson hired a placement agent, approved private memos and a business plan for prospective investors and negotiated terms with investors, according to the letter.
A private equity firm, which Finra did not name, invested $5 million in the company and the remaining funds came from accredited investors who invested through a limited partnership. Two of the investors were employees of the company and Davidson’s customers at Equitable, according to Finra.
Davidson, who started his career at Equitable in 2002, did not immediately respond to a request for comment sent through social media. He dropped his brokerage license in March 2023 and now runs a registered investment advisory firm, Victory Financial Group, according to Securities and Exchange Commission records.
Victory managed $143 million as of May 2023, according to its most recent Form ADV filing.
Sharron Ash of Hamburger Law Firm in New York, who represented Davidson in the Finra settlement, did not respond to a request for comment.
Equitable fired Davidson in 2022 for an unapproved private securities transaction, according to BrokerCheck. The ex-broker said in a comment appended to the disclosure that he had made “multiple disclosures” about the outside business to firm management.
Outside business activities commonly trip up brokers and firms, which are required to supervise for potential customer conflicts. A broker may have an outside activity approved, but if the nature of the business changes or the role evolves to include fundraising, it can become a private securities transaction requiring separate approvals, said Patti Vannoy of Mattson Ricketts, who was not involved in the Finra settlement.