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

A broker-dealer settled FINRA charges for selling interests in securities without disclosing material information.

In a Letter of Acceptance, Waiver and Consent, FINRA said that the securities of two limited partnerships were in the process of being registered with the SEC, but there were delays in the filing of audited financial statements due to a pending completion of a forensic audit. FINRA said that interests in these securities were sold without first disclosing the filing delays. FINRA determined that the delay in filing the audited financial statements, and the accompanying justifications, constituted material information that should have been disclosed by the broker-dealer once it was made aware.

FINRA said that the failure to disclose the delays violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"). To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a $70,000 fine and (ii) $89,652 in partial restitution, plus interest.