Jake Louis Fruge (CRD #6187396, Houston, Texas)

November 28, 2023 – An AWC was issued in which Fruge was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 24 months. Without admitting or denying the findings, Fruge consented to the sanctions and to the entry of findings that he engaged in an OBA as an owner and co-CEO of a company that engaged in e-commerce and lead generation without providing prior written notice to his member firm. The findings stated that the OBA’s customers—including certain firm customers and firm registered representatives—each paid an up-front fee of at least $40,000 per e-commerce storefront and $4,000 per digital real estate website. The OBA’s customers then received a percentage of any income those storefronts and websites generated. Fruge did not disclose any component of the OBA to the firm until the after it was founded, when he orally disclosed only the e-commerce storefront component of the company. The firm approved this component of Fruge’s OBA several months later, by which time customers had already paid substantial fees to the OBA. The next year, the digital real estate component of the OBA was reported to the firm. By this time, customers had already purchased over 900 digital real estate websites, and Fruge had earned a significant amount from his involvement with the OBA. Following its approval of the e-commerce storefront component of Fruge’s OBA, the firm learned that the OBA had been marketed to other firm registered representatives, potentially creating a conflict of interest with Fruge’s firm business. The firm warned Fruge to stop this conduct and requested further information about the company, including the names of any firm customers or registered representatives who had purchased e-commerce storefronts. Fruge did not provide the requested information. Fruge’s failure to provide complete and prior written OBA disclosures to the firm—including his late disclosure of the e-commerce storefront component, the late disclosure of the digital real estate website component, and his failure to provide the list of firm representatives and customers who were also OBA customers—undermined the firm’s ability to evaluate the OBA and determine whether to restrict or prohibit Fruge’s participation in it. Later, the firm directed Fruge to stop engaging in any marketing activities for the e-commerce storefront component, which was the only component of the OBA Fruge had disclosed to it. Nonetheless, Fruge continued to market products of the company. Subsequently, the firm made Fruge choose between his OBA and working for it and he chose to continue with his OBA after winding down his firm business. The suspension is in effect from December 4, 2023, through December 3, 2025. (FINRA Case #2022074939302)