Private Placements - Law Offices of Robert Wayne Pearce

Mar 16, 2015

WFG Investments Hit with $700,000 Fine for Due Diligence and Supervision Lapses

WFG Investments, Inc. of Dallas, Texas submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but it did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to conduct appropriate due diligence and supervision with respect to a private placement offering and that a registered representative sold an investment away from the firm as an approved private securities transaction. FINRA found that in various times between March 2007 and January 2014, “the Firm failed to commit the necessary time, attention and resources to an array of critical regulatory obligations related to its supervision of registered representatives.” Clients who invested in the private placement offering allegedly lost their entire investment. FINRA also found that WFG Investments failed to supervise its representatives, who allegedly recommended the sale of high risk equity and ETF purchases for a retired client with conservative risk tolerance. In addition, WFG Investments failed to supervise a representative’s private securities transactions. According to FINRA, the WFG representative allegedly structured and sold two funds that had substantial investments (exceeding the 50% limit) without investors’ knowledge. All private placement investors allegedly “lost 100% of their investments resulting from a related entity’s fraudulent business practices.” Consequently, WFG Investments was censured and fined $700,000 by FINRA.

Jul 24, 2014

Brookville Capital Partners and Anthony Lodati Named in FINRA Complaint for Alleged Fraud

Melville, New York-based Brookville Capital Partners LLC (Brookville Capital) and the firm’s president, Anthony F. Lodati, were named in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm and Mr. Lodati defrauded investors in connection with a private placement offering. According to the complaint, Brookville Capital and Mr. Lodati solicited customers to invest in a private placement offering that failed to disclose material facts about an individual involved in the offering. Anthony Lodati allegedly learned that the individual, who had effected transactions on behalf of the private placement, had been fined by the Securities and Exchange Commission (SEC) for securities fraud and had been convicted of a felony by the state of Florida. The FINRA complaint alleges that Mr. Lodati failed to inform any of the potential investors of the individual’s involvement. Moreover, the private placement memorandum (PPM) allegedly made no mention of the individual or of his regulatory or criminal background.

Jul 21, 2014

Former WFG Investments Broker Matthew Bell Arrested

Last week, Matthew A. Bell, a former WFG Investments, Inc. stockbroker was arrested for engaging in a penny stock fraud scheme involving many securities, including CodeSmart Holdings, Cubed, Inc., StarStream Entertainment, Inc. and The Staffing Group, LTD. He was indicted along with A.J. Discala, Marc E. Wexler, Kyleen Cane, Victor Azrak and Ira Schapiro for allegedly defrauding investors and potential investors in the 4 public companies. The alleged scheme was “built on lies, deceit and manipulated trading activity to defraud the securities markets and investing public,” according to the US Attorney’s office for the Eastern District of New York. The defendants alleged “pump and dump” scheme included false and misleading press releases and SEC filings, stock market manipulation techniques such as “wash trades,” “matched trades,” “marking the close,” and unauthorized trading for clients who it entrusted the stockbrokers with their life savings. As in all such schemes, the price of the various public corporations climbs for no real reason and then falls from the sky with the investors holding worthless stock. According to the FBI, some of Mr. Bell’s victims had no idea that the stock was being purchased in their accounts by the stockbroker.

Jun 23, 2014

Carolina Financial Securities Fined For Failure to Supervise the Sale of Private Placements

Brevard, North Carolina-based Carolina Financial Securities, LLC (Carolina Financial) consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to supervise the sale of an unregistered private placement offering to investors with investments of approximately $1.1 million. FINRAs findings stated that Carolina Financial neglected to follow its procedures with regard to the review and verification of statements made in private placement offering documents. Furthermore, FINRA found that the brokerage firm failed to conduct adequate due diligence prior to the approval of the offering for sale to its investors.

Apr 7, 2014

FINRA Suspends Marylin Myers for Selling Away On The Edge Marketing Notes

Marylin T. Myers, a former Bayview, Texas-based registered principal employed by Lincoln, Nebraska-based Allstate Financial Services, LLC, submitted a Letter of Acceptance, Waiver and Consent in which she consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that she participated in the sale of a privately held company’s promissory notes to investors without notifying her firm or obtaining the firm’s written approval. FINRA’s findings stated that Ms. Myers recommended that investors, who were not the firm’s customers, invest in On The Edge Marketing LLC notes. Ms. Myers helped facilitate their purchases and invested $16,000 of her own money in the notes. Collectively, the investors and Ms. Myers invested more than $1,000,000 in the notes. To date, On The Edge Marketing has failed to repay the principal and interest due to the investors and Ms. Myers. FINRA’s findings also stated that on the firm’s annual compliance questionnaires, Ms. Myers inaccurately stated that she had not engaged in any private securities transactions and inaccurately stated that she had not engaged in soliciting, referring, or recommending any private placements or private securities products.

Dec 31, 2013

Edward Scro Permanently Barred by FINRA for Unsuitable Recommendations To Elderly Customers

Edward Francis Scro, a former Registered Representative of the now un-registered financial advisory company NelsonReid, Inc., was permanently barred by the Financial Industry Regulatory Authority (FINRA) for making unsuitable recommendations to his elderly customers. According to FINRA’s findings, Mr. Scro, of Naples, Florida, advised his elderly customers, who needed a stable monthly income, to invest in risky, illiquid investments, sold primarily by Private Placement Memoranda (PPMs).

Dec 27, 2013

Michael Barina Fined and Suspended by FINRA for Unsuitable Private Placement Recommendations

Longwood, Florida-based registered representative Michael Anthony Barina, employed by Altamonte Springs, Florida-based Merrimac Corporate Securities, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanctions and findings that he recommended an investment in a private placement investment pool without sufficiently understanding the entity’s investment strategy or its parameters. FINRAs findings stated that the entity’s investment strategy included investing up to 25% of its assets in a single security and engaging in options trading. According to FINRA, Mr. Barina allegedly “lacked a reasonable basis to believe that the entity was a suitable investment for the customers,” thereby making an unsuitable recommendation.

Dec 6, 2013

Martinez-Ayme Securities Sanctioned Again For Securities Law Violations

The Martinez-Ayme Financial Group Inc. D/B/A Martinez-Ayme Securities was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for alleged violations of Rule 101 of Regulation M of the Securities Exchange Act of 1934 and the self-regulatory agencies rules in connection with a series of private placement offerings, including a company described as CPWV. This company’s business was the development, commercialization and marketing of a series of electric generating power systems designed to produce electrical power with zero omissions or waste byproducts.