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- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Private Placements: Flunking the Basics
By Howard Haykin
A Minnetonka, MN-based firm agreed to pay a nominal fee and certify that it has enhanced its deficient supervisory system to settle FINRA charges that it failed to fulfill its regulatory and supervisory obligations pertaining to private placements by ... (i) not conducting and documenting reasonable due diligence; and, (ii) not obtaining and recording required customer information.
DUE DILIGENCE FAILURES. Between March 2015 and December 2015, the broker-dealer served as a placement agent for a Regulation D private placement offering of securities that raised $2,516,000 – most of which was sold by one of the firm’s registered reps to 24 accredited investors. Yet, after agreeing to participate as a placement agent in the offering, the firm failed to conduct and document a reasonable due diligence investigation. In particular, the firm failed to recognize and investigate contradictory and potentially confusing statements made in the Private Offering Memorandum about material terms of the offering.
CUSTOMER ACCOUNT INFORMATION. Between June 2012 and October 2015, the firm used a New Account Form that requested each of the required items listed in SEC Rule 17a-3(a)(17) and gathered other specific information with respect to customers' investment profiles. However, the firm failed to obtain and record required information for many of the customers who purchased interests in private placements. Making matters worse, the firm was cited in 2013 for customer account information deficiencies - as a result of a previous FINRA examination.
This case was reported in FINRA Disciplinary Actions for November 2018.
For details the case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2015043584501.