Broker-Dealer Settles FINRA Charges for Failing to Disclose Material Information

A broker-dealer settled FINRA charges for failing to disclose material information to investors when selling certain limited partnership interests in a private placement.

In the Acceptance, Waiver and Consent, FINRA stated that during the relevant period, the issuer updated the broker-dealers on a delay in "registering certain classes of securities issued by certain of the limited partnerships" due to a pending completion of a third party audited financial statements. FINRA found that the broker-dealer negligently failed to disclose this material information to three investors when selling the unregistered limited partnership interests.

As a result, FINRA found that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

In the settlement, the broker-dealer agreed to (i) a formal censure, (ii) a fine of $40,000 and (iii) partial restitution of $16,000 plus interest.