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FINRA Ruling: Ten Individuals, Eight Firms Sanctioned
Investment attorneys have been on the lookout for investors who have been wronged and suffered losses as the result of brokers or firms misrepresenting and/or recommending private placements without a reasonable basis. On November 29, the Financial Industry Regulatory Authority (FINRA) announced that it would sanction ten individuals and eight firms for doing just that. In addition, FINRA ordered a total of more than $3.2 million in restitution.
According to FINRA’s press release, “the broker-dealers did not have adequate supervisory systems in place to identify and understand the inherent risks of these offerings and, as a result, many of the firms failed to conduct adequate due diligence of these offerings. In addition, some of the firms did not have reasonable grounds to believe that the private placements were suitable for any of their customers.”
This is not the first time that firms have been punished for this type of securities fraud — and it won’t be the last. FINRA sanctioned seven individuals and two firms in April 2011 and, as was seen in the earlier blog post, “A Notice to LaeRoc Income Funds Investors,” future securities arbitration against LaeRoc may involve similar misconduct.
The risky private placements were issued by Medical Capital Holdings Inc., DBSI Inc. and Provident Royalties LLC. Firms sanctioned were NEXT Financial Group Inc., Investors Capital Corporation, Garden State Securities Inc., Capital Financial Services, National Securities Corporation, Equity Services Inc., Securities America Inc. and Newbridge Securities Corporation. Individuals sanctioned were Steven Lynn Nelson, Kevin John DeRosa, Vincent Michael Bruno, Brian W. Boppre, Matthew G. Portes, Stephen Anthony Englese, Anthony Paul Campagna, Robin Fran Bush, Leroy H. Paris II and Michael D. Shaw.
“FINRA continues to look closely at sales of private placements to determine whether the selling firms are fulfilling their responsibilities to customers,” says FINRA Executive Vice President and Chief of Enforcement Brad Bennett.
The investment attorneys at The Law Office of Christopher J. Gray are doing the same. If you believe you have suffered losses as a result of misrepresented or wrongly-recommended private placements, contact a stock fraud attorney at (866) 966-9598 for a no-cost, confidential consultation.