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NEWSLETTERS & ALERTS
A Present-Day ‘Rip Van Winkle’ Comes Full Circle with FINRA
by Howard Haykin
WHAT WENT WRONG. From November 2015 to December 2016), RIP engaged in outside business activities and a private securities transaction, without first providing prior written notice to Kestra Investment Services.
The undisclosed outside business activities (“OBAs”) involved … a proposed $100 million investment fund that would be offered to individual and institutional investors.
- RIP registered “Origin Fund LLC” as a limited liability corporation with the State of Connecticut, naming himself as the sole member and manager.
- RIP opened a bank account and received a Tax ID Number for the fund.
- RIP created an email address with the domain name “originfund.us.”
- RIP prepared a business plan and a presentation describing his proprietary investment strategy, while naming himself 'Chief Investment Officer' and 'Manager'.
- RIP met with and solicited individual and institutional investors.
The undisclosed private securities transaction (“PST”) involved … a $50,000 investment that RIP solicited and received from an individual as seed money for his efforts to launch the Origin Fund. In return, it was agreed that the investor would receive a 4% equity share of the Origin Fund and share yearly in any profits generated by the venture. The transaction was memorialized in a written letter of understanding.
This case was reported in FINRA Disciplinary Actions for February 2019.
For further details, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016051985601.