Private Placements - Law Offices of Robert Wayne Pearce

Aug 7, 2017

WFG Investments Fined by FINRA for Failure to Supervise Unsuitable Trading

WFG Investments, Inc. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been fined $150,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise its registered representative’s unsuitable trading despite numerous red flags. WFG Investments is headquartered in Dallas, Texas and currently has approximately 237 registered representatives and 118 branch offices. FINRA found that WFG Investments failed to appropriately supervise the sales practices of a registered representative who had engaged in unsuitable trading in his customers’ accounts by overconcentrating them in low-priced securities. For example, FINRA found that during 2012, the WFG representative’s account purchases were 66% low-priced securities. In 2013, FINRA’s findings state that the account purchases were 80% concentrated in these securities and/or illiquid and highly speculative private placement and REIT investments.

May 10, 2017

Red River Securities and CEO Expelled/Barred by FINRA for Fraudulent Oil and Gas Offerings

A FINRA hearing panel has expelled Red River Securities, LLC and barred its CEO, Brian Keith Hardwick, for fraudulent sales in five oil and gas offerings. They have also been ordered to pay $24.6 million in restitution to investors. According to FINRA, over the course of four years, Red River Securities and Brian Hardwick made misrepresentations and omissions in connection with the sales of interests in oil and gas joint ventures issued by Regal Energy, LLC, a close affiliate of Red River Securities. FINRA found that Red River Securities and Brian Hardwick fraudulently misrepresented and omitted facts relating to the risky offerings. For example, they allegedly misrepresented the amount of income distributed to investors, failed to disclose material facts regarding the risk involved, and omitted information about the fees involved. The FINRA panel referred to this aforementioned misconduct as egregious and noted the “extent of the respondents’ monetary gain,” in which investors received total distributions less than $50,000 from the more than $25 million they invested in the offerings.

Jul 29, 2016

Miami CP Capital Securities Representative Suspended for Private Placement Offering Violations

Charles McInnis of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in connection with a contingent private placement offering of senior secured notes issued by a Columbian energy company. FINRA found Mr. McInnis did not understand the specific requirements of two exemptions from registration applicable for the private placement offering and failed to ensure that his customer’s purchases of the notes complied with the requirements of either of the exemptions. From July 2009 through his resignation in August 2013, Mr. McInnis acted as President, Chief Executive Officer and Chief Compliance Officer for CP Capital Securities, Inc. (CP Capital). During this time period, Mr. McInnis was delegated responsibility to supervise CP Capital and its associated persons’ participation in a minimum contingency private placement offering. A private placement is generally an offering between only a select few investors in order to raise capital without registration with the Securities and Exchange Commission (SEC). Private placement offerings must satisfy certain conditions (safe harbors) to avoid registration with the SEC. For this offering, the Notes were unregistered securities exempt from the registration requirements of Section 5 of the Securities Act pursuant to the Rule144A safe harbor and the Regulation S exemption.

Jun 27, 2016

Miami Brokerage Firm CP Capital Securities Fined for Illegitimate Private Placement Offering

CP Capital Securities, Inc. (CP) of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to maintain proper supervisory procedures in connection with private placement offerings. FINRA noted that CP had participated in several minimum contingency private placement offerings without “adequate supervisory procedures.” A private placement is generally an offering between only a select few investors in order to raise capital without registration. Private placement offerings must satisfy certain conditions to avoid registration with the Securities and Exchange Commission (SEC). CP’s failure to supervise those offerings put the exemptions in jeopardy.

Dec 16, 2015

Lincoln Financial Advisors Fined for Supervisory System Failures

Lincoln Financial Advisors Corporation (LFA) of Fort Wayne, Indiana submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to implement and enforce reasonable supervisory procedures related to the recommendation of private placement variable annuities (PPVA). LFA has been a FINRA member since 1969 and has nearly 2,500 registered representatives and over 500 branch offices. FINRA found that between October 2008 and April 2009, representatives from two of LFA’s branch offices recommended customers to invest in a hedge fund that engaged in a complex option trading strategy. FINRA alleged that the complexity of the hedge fund exposed the LFA clients to a high degree of financial risk. LFA however approved the recommendations and 25 firm customers invested approximately $11.7 million in the hedge fund. In 2010, the hedge fund was shut down.

Dec 9, 2015

WFG Investments Broker Named in FINRA Complaint About Fraudulent Private Placement Offering

Stuart G. Dickinson, a former registered representative with the Highland Park, Texas branch of WFG Investments, Inc. was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he failed to perform adequate due diligence in connection with a private placement securities offering that turned out to be a fraudulent investment. The complaint alleges that Mr. Dickinson, of Highland Park, Texas sold limited partnership interests in ATMA, LP (ATMA), a private placement securities offering involving the acquisition and operation of automated teller machines (ATMs) to seven customers of WFG Investments for $1,024,000. According to FINRA’s complaint, Mr. Dickinson failed to conduct adequate due diligence with respect to the securities investment, because the underlying business scheme of the offering was a fraud and most of the ATMs were fictional. FINRA’s complaint alleges that had Mr. Dickinson conducted proper due diligence of the offering, he would have found numerous red flags, such as stale and overstated performance history. As a result of the foregoing alleged events, Mr. Dickinson’s seven customers suffered a total loss of more than a million dollars.

Aug 14, 2015

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.

Aug 12, 2015

Seattle, Washington Firm NSC Fined for Compensation Violations

National Securities Corporation (NSC) located in Seattle, Washington submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial industry Regulatory Authority (FINRA) for allegedly failing to disclose to investors compensation they were receiving. NSC has been a registered FINRA member since 1947 and provides retail brokerage, investment banking and investment advisory services.

Jun 18, 2015

Former Westpark Capital Broker Suspended for Misleading Personal Emails to Clients

Michael Bell, a former registered representative with the Boca Raton, Florida branch of Westpark Capital, Inc. submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he violated his member firm’s written supervisory procedures (WSPs) by sending misleading, promissory emails to clients from his personal email account. According to FINRA, Michael Bell used his personal email account to communicate with customers, both current and prospective, without the approval of Westpark Capital and in violation of the firm’s WSPs. Mr. Bell had been disciplined previously by Westpark Capital for alleged email related misconduct. Therefore, FINRA stated that Mr. Bell knew that using his personal email for customer correspondence was prohibited.

Mar 20, 2015

LaSalle Street Securities Representative Fined For Unapproved Private Placement Offerings

David Leonard Potter, of St. Petersburg, Florida submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made “negligent misrepresentations to investors” in regard to private offerings his firm, LaSalle Street Securities, had yet to approve. Mr. Potter, former branch manager of LaSalle Street Securities’ Tampa, Florida office, ran an investment advisory business, Platinum Wealth Partners, Inc. (PWP) which he decided to expand in late 2012. Without the capital to do so, Mr. Potter commenced a PWP private placement offering in March 2013 to raise capital through the sale of convertible debenture units. The offering was a minimum and maximum offering requiring at least $1.5 million being raised before distribution.