Broker-Dealer Settles FINRA Charges for Failing to Disclose Material Facts to Investors

A broker-dealer settled FINRA charges for failing to disclose to investors that certain issuers of securities offerings failed to timely file audited financial statements with the SEC.

In a Letter of Acceptance, Waiver, and Consent, FINRA said that the firm sold interests in two securities offerings to eight investors without disclosing that it knew that the related issuers' filings of audited financial statements would be delayed (due to pending completion of an audit). FINRA said that the delay in filing audited financial statements was "material information that should have been disclosed."

As a result, FINRA determined that the firm violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) accept a censure, (ii) pay a civil monetary penalty of $60,000 and (iii) pay partial restitution totaling $48,000 plus interest. FINRA previously settled charges against a separate broker-dealer for related charges (see previous coverage).