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Merrion Securities of New Jersey Fined by FINRA for Violating the Exchange Act

Merrion Securities, LLC (Merrion) of Westfield, New Jersey Submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to properly establish an escrow account for investor funds. Organized as a Limited Liability company and FINRA member since 1992, Merrion focuses primarily on general securities transactions with approximately 117 registered representatives within one branch office.

Without admitting or denying the FINRA finding, Merrion agreed to the sanctions for alleged violations of the Securities and Exchange Act of 1934 and FINRA Rule 2010. Between 2009 and 2010, Merrion was the private placement agent for a contingent private placement offering of securities in Vir2us, Inc. The memorandum for the private offering stated that the offering needed to raise a minimum of $2 million and until that $2 million was met, investors funds would be held in an escrow account. However, FINRA found that instead of putting investors funds in an escrow account, Merrion deposited investor funds into Vir2us’ bank account and then later into an attorney trust account that wasn’t under Merrion’s control. FINRA alleged that for failing to properly deposit investor funds, Merrion violated Section 15(c)(2) of the Securities and Exchange Act of 1934, Rule 15c2-4, and FINRA Rule 2010.

Additionally, FINRA found that Merrion altered the contingency of the private offering when the minimum $2 million investment was not met. FINRA alleged that Merrion lowered and thereby altered the contingency minimum investment total to $1 million. When the terms of the contingency were altered, Merrion was required to terminate the offering and return investor’s funds. FINRA found that Merrion failed to terminate the private offering and willfully violated Section 10(b) of the Securities Exchange Act of 1934, SEC Rule 10b-9 and FINRA Rule 2010. For the alleged violations, Merrion was censured and fined $15,000.

Stockbrokers have been known to engage in many types of practices which violate industry and firm rules, practices, and procedures. In order to protect customers from stockbroker misconduct, FINRA rules require broker-dealers Merrion Securities to establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the firms, such as Merrion Securities own policies and procedures. If broker dealers and/or their supervisors do not establish and implement these protective measures, they may be liable to investors for damages which flow from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unlawful or prohibited conduct can file a claim to recover damages against broker dealers like Merrion Securities, which should consistently oversee its employees in order to prevent stockbroker misconduct.

Have you suffered losses in your Merrion Securities investment account due to your stockbroker’s misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and prohibited conduct.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.