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.