Ross, Sinclaire & Associated in Cincinnati, Ohio submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which they were censured and fined $200,000 for allegedly failing to disclose information in violation of FINRA Rule 2010 by acting in contravention of Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”).
Since November 1989, Ross, Sinclaire & Associates (Ross Sinclaire) has been a regional broker-dealer that performs municipal underwritings and other services. In April 2014, Ross Sinclaire entered into an agreement as the exclusive placement agent to raise $3.5 million for a film tax credit finance company through a private placement of notes from seven investors. According to the FINRA findings, Ross Sinclaire failed to disclose certain material facts assisting with the preparation and circulation of a Confidential Information Memorandum (“CIM”) for the notes. The findings stated that in addition to the 2% commission Ross Sinclaire would receive, they would also receive a certain percentage of profits on the sale of tax credits. However, Ross Sinclaire allegedly failed to disclose that they would be receiving half of the revenues the Tax Credit Lender anticipated earning from the completion and that one of their registered representatives was Vice President of the issuer. In addition to the FINRA findings, Ross Sinclaire allegedly failed to disclose information regarding a Private Placement Memorandum (“PPM”) for bonds to finance the construction of a community recreation center that would have been important material for investors in deciding whether to invest in the bonds.
FINRA Rule 2010 requires that FINRA member firms observe high standards of commercial honor and just and equitable principles of trade. Section 17(02) of the Securities Act provides that it shall be unlawful “to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading…” It is a violation of FINRA Rule 2010 to act in contravention of Section 17(a)(2) of the Securities Act.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from the failure to disclose information, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Ross Sinclaire, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Ross Sinclaire account due to their failure to disclose information? 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 Ross Sinclaire and stockbrokers who may have engaged in broker misconduct and caused investors’ losses.
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 40 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 visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.