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.
In 2013, NSC offered two private placements of its parent company National Holdings Corporation (National Holdings). When offering unregistered securities issued by a controlling entity of a FINRA member firm, it is the responsibility of the firm to disclose to investors any compensation it will receive in connection with the offering. Although NSC generally disclosed to investors that it would receive compensation in connection to private placement sales, FINRA found that NSC failed to disclose in writing the compensation it would receive for each private placement and thereby violated FINRA Rules 5122 and 2010.
Without admitting or denying the findings, NSC agreed to the FINRA sanctions. FIRNA alleged that NSC provided investors of the two offerings with the Registration Rights Agreement, SPA, non-disclosure agreement and various other documents that did not include compensation it was going to be paid in connection with each offering. The NSC sales rose approximately $12 million for the two offerings. NSC received $212,291 and 100,090 restricted shares of National Holdings for the first offering that ended in January 2013 and $158,750 for the second offering that ended in August 2013. FINRA Rule 5122 requires a member firm that engages in a private placement of its own securities to disclose in writing any compensation it will be paid.
For its alleged violations, National Securities Corporation was censured and fined $20,000.
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 National Securities Corporation 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 National Securities Corporation 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 National Securities Corporation, which should consistently oversee its employees in order to prevent stockbroker misconduct.
Have you suffered losses in your National Securities Corporation 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 firstname.lastname@example.org, 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.