- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
A firm settled FINRA charges for violations of content standards in private offerings sold by the firm and sent to potential investors.
In a Letter of Acceptance, Waiver and Consent, FINRA said the firm distributed communications related to private placement offerings that violated FINRA Rule 2210 ("Communications with the Public"). The communications contained projections of performance that failed to "provide a sound basis" for evaluating the facts regarding the securities products or services. Further, FINRA said the firm misrepresented these offerings by:
- failing to specify one offering was "speculative, illiquid, and could result in a total loss of the investment";
- failing to disclose material differences between two private placements and less risky investments;
- describing an illiquid investment as an offering having "enhanced liquidity"; and
- inaccurately describing the use of funds by the issuer.
As a result, the firm also violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").
The firm also settled FINRA charges for the untimely filing of placement memoranda in violation of FINRA Rule 5123 ("Private Placements of Securities").
To settle the charges, the firm agreed to (i) a censure and (ii) a $35,000 fine.
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