FINRA Seeks to Shut Down Pinnacle Partners

The Financial Industry Regulatory Authority (FINRA) has filed a notice to shut down San Antonio, Texas based Pinnacle Partners Financial Corporation for peddling fraudulent oil and gas private placements. According to a December 3, 2010 FINRA News Release the eight private placements were being sold through “boiler room” tactics where brokers would make thousands of cold calls weekly to solicit over $10 million for the offerings of the oil and gas drilling joint ventures.

FINRA alleged that the fraud began in August 2008, when the president and owner of the firm, Brian K. Alfaro, deleted the following from an investment summary offered to prospective clients: “All currently producing wells are very marginal.” Additionally, he stated in another private placement that a “cash distribution to partners” of $14.3 million had been made, when the true figure was only $1.5 million. Other misconduct alleged included providing investors with maps omitting dry or plugged wells near drilling sites, destroying documents, failing to report customer complaints and grossly inflating gas prices, reserves, gross returns and monthly cash flows.

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