South Florida Arbitration & Litigation Lawyer Blog
Private Placement and Direct Investment Fraud, Mismanagement and Misrepresentation FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
February, 2012:
Kevin Seth Baltimore (CRD #1863517, Registered Principal, Charleston, South Carolina) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Baltimore consented to the described sanction and to the entry of findings that he made fraudulent and unsuitable recommendations to customers, inducing them to invest in a commercial paper note which was a fraudulent private placement purportedly for accredited investors pursuant to Regulation D under the Securities Act of 1933; customers invested a total of $138,000 in the note. The findings stated that Baltimore also recommended the note investment to another client of one of his member firms. The findings also stated that Baltimore did not have reasonable grounds for believing the customers’ purchase of the note was suitable given their financial condition and that they were not accredited investors as defined in Rule 501 of Regulation D. The findings also included that Baltimore made materially misleading statements and omissions of fact when recommending the investment, including misrepresenting the type of business in which the issuer was engaged and misrepresenting the use of proceeds to be raised by the note, and failing to disclose that the issuer was a shell company with no significant business. FINRA found that Baltimore intentionally withheld from his firms that he was engaged in outside securities transactions and recommended the purchase of the note without the firms’ approval or knowledge, and participated in private securities transactions without providing written notice describing in detail the proposed transactions, his role therein and stating whether he had received, or would receive, selling compensation in connection with the transactions. (FINRA Case #2010023526301).