South Florida Arbitration & Litigation Lawyer Blog
FINRA Broker Fraud and Mismanagement Arbitration Attorney, Russell L. Forkey, Esq.
May, 2011
Newbridge Securities Corporation (CRD #104065, Ft. Lauderdale, Florida) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to establish, maintain and enforce a supervisory system and written procedures relating to private offerings the firm sold to its customers. The findings stated that the firm’s supervisory system and written procedures for private offerings were deficient; they did not identify due diligence steps to be taken for private offerings. The findings also stated that the firm approved for sale, and sold, various private offerings by an entity that raised approximately $2.2 billion from over 20,000 investors through several Regulation D offerings. The findings also included that the entity made all interest and principal payments on these Regulation D offerings until it began experiencing liquidity problems and stopped making payments on some of its earlier offerings; nevertheless, the entity proceeded with another offering. FINRA found that the firm’s due diligence for the offering consisted merely of reviewing the PPM and investor subscription documents, without seeking or obtaining financial documents or information from the issuer regarding the offering, nor did the firm obtain any due diligence report for the offering or visit the issuer’s facilities or meet with its key personnel. FINRA also found that the firm approved for sale, and sold, a total of $258,597.16 to its customers for interests in another entity’s private offering. In addition, FINRA determined that the firm failed to conduct due diligence for these offerings; among other things, it did not obtain offering documentation beyond the investor subscription documents. Moreover, FINRA found that the firm sold additional unregistered offerings to its customers and failed to conduct adequate due diligence for each of these other offerings. (FINRA Case #2009016159401).
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