Call Now For a Free Consultation:
(614) 502-6165

FINRA Continues Reg D Crackdown

In Feb., FINRA announced that monitoring Regulation D private placements and non-traded real estate investment trusts were the top two areas of focus for the organization's enforcement department. Last week, FINRA released details on the crackdown's first series of actions, including the fines and sanctions levied upon various broker-dealers and executives ("Finra in Reg D crackdown," InvestmentNews, April 8, 2011).

Two broker-dealers, Workman Securities Corp. and Askar Corp., received the most attention in the article. Workman Securities, which sold more than $9 million of Provident Royalties private placements to clients, was fined $700,000. The money will be used to pay restitution to the firm's clients. Askar, which made $578,000 in commissions on the sale of private placements from DBSI Inc., was fined $45,000 for failure to conduct proper due diligence.

In fact, all of the fines and sanctions announced by FINRA last week focused on the failure of executives and broker-dealers to conduct proper due diligence on the private placements sold to clients by their firms.

In a statement quoted by InvestmentNews, Brad Bennett, Finra executive vice president and chief of enforcement, said: "Senior officials at these firms failed to fulfill their responsibilities to customers by not conducting reasonable investigations of these unrelated offerings, especially in light of multiple red flags suggesting liquidity concerns, missed interest payments and defaults."

In addition to the fines against the firms, FINRA permanently barred or temporarily suspended seven executives: Robert Vollbrecht, Workman's former president; David William Dube, owner of defunct Peak Securities Corp.; Timothy Cullum, former CEO of now-defunct Cullum & Burks Securities Inc.; Steven Burks, former president of now-defunct Cullum & Burks Securities Inc.; Jeffrey Lindsey, former executive of Capital Financial Services Inc.; Bradley Wells, former executive of Capital Financial Services Inc.; and Jay Lynn Thacker, former chief compliance officer at Meadowbrook Securities LLC.

While not mentioned in the sanctions released last week, National Securities Corp. is also in hot water with FINRA over the sale of private placements. Actions against additional broker-dealer firms are expected in coming months.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation

Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
6140 Parkland Blvd.,
Suite 330
Mayfield Heights, OH 44124
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
Follow Us
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram