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. Continue Reading