FINRA Announces $1.5 Million Sanction Against Broker-Dealer and Bars President for Fraud

FINRA Enforcement

On March 12, FINRA announced an order requiring a New York-based broker-dealer to pay over $1 million in restitution and $500,000 in fines for alleged fraud in sales of a private placement offering. According to the Order, from January 2011 to October 2011, the firm defrauded its customers by claiming – without performing sufficient due diligence – they would benefit from investing in the pre-initial public offering shares of a California-based automaker, but failed to disclose the criminal and adverse regulatory background of a key individual connected to the automaker. In addition to the $500,000 fine against the broker-dealer, its president has been barred from the securities industry. Under the settlement agreement, the broker-dealer and its president neither admitted nor denied the allegations.