FINRA Issues Sanctions for Reg D Offerings
The Financial Industry regulatory Authority (FINRA) made an announcement on November 29, 2011 that it had issued sanctions against eight firms and ten individuals for the marketing and sales of allegedly fraudulent Reg D offerings, according to the FINRA release and Investment News. The monetary sanctions assessed against the perpetrators were more than $3.2 million in restitution to the investors who purchased the private placements.
Next Financial Group Incorporated was hit with the largest sanction by FINRA ordering them to pay $2 million in restitution to investors. Securities America Incorporated, previously owned by Ameriprise Financial Incorporated, and six other independent broker-dealers were sanctioned for their sales of private placements. Medical Capital Holdings Incorporated and Provident Royalties LLC offered private placements, which were deemed to be fraudulent by the U.S. Securities and Exchange Commission (SEC) in 2009, that were primarily distributed by Securities America, which is now part of Ladenburg Thalmann & Company.
Garden State Securities Incorporated was ordered to pay investors $300,000 in restitution regarding the sale of the Medical Capital offering. Capital Financial Services was ordered to pay $200,000 in restitution. National Securities Corporation had to pay $175,000 in restitution. Equity Services Incorporated had to pay $164,000 in restitution for DBSI private placement offerings and New bridge Securities Corporation was fined $25,000.
Several other individuals were hit with fines from FINRA, including the co-owner of Garden State Securities, Kevin DeRosa, who was suspended for 20 days and fined $25,000.Matthew Portes, Director of Alternative Investments for National Securities, was fined $10,000 and suspended as a principal for 6 months. Stephen Englese, Senior Vice President of securities operations for Equity Services, was fined $10,000 and suspended for 30 days, in addition to one of the firm's registered representatives, Anthony Campagna, who was suspended for 30 days and fined $25,000. Newbridge's former Chief Compliance Officer, Robin Bush, was suspended 6 months and fined $15,000. Another registered representative with VSR Financial Services Incorporated, Michael Shaw, was barred from the industry for his part in peddling DBSI private placements; manipulating client information by changing investment objectives, tolerance for risk and net worth and generating some $57,000 in fees and commissions from the sales.
If you have suffered losses from owning Reg D offerings, please contact our securities law firm for a confidential consultation at 1-800-259-9010.