Firm Settles FINRA Charges for Private Placement Violations

A firm settled FINRA charges for supervisory and late filing violations related to private placements.

In a Letter of Acceptance, Waiver, and Consent, FINRA found that from March 2017 to December 2018, the firm did not conduct and document reasonable investigations for two private placement offerings that it recommended and sold to customers. According to FINRA, rather than conducting an independent investigation, the firm relied on information that the issuers provided. FINRA said that the firm also failed to review any business models, industry prospects and possible regulatory restrictions on the business.

Additionally, FINRA found that from April 2017 to February 2019, the firm failed to timely file with FINRA information regarding 26 private placements that the firm sold. The firm's filing dates for these placements ranged from 16 days to 335 days after the date of the first sale, rather than within 15 calendar days as required.

As a result, the firm was found in violation of FINRA Rules 3110(a) and (b) ("Supervision"), 5123 ("Private Placements of Securities"), and 2010 ("Standards of Commercial Honor and Principals of Trade").

To settle the charges, the firm agreed to (i) a censure and (ii) a $40,000 fine.