South Florida Arbitration & Litigation Lawyer Blog
Private Placement, Direct Investment and Selling Away, Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
February, 2012:
Robert John Clark (CRD #47828, Registered Representative, Vista, California) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $25,000 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Clark’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Clark consented to the described sanctions and to the entry of findings that he recommended and sold an entity’s private placement offering to some customers for a total of $350,000. The findings stated that Clark became aware of the missed interest payments in the entity’s earlier offerings, and also saw the default notice from a bank, the trustee for one of the earlier offerings, but continued to sell the offering. The findings also stated that Clark did not view the offering as a speculative product due to favorable past performance of the company and the fact that it was paying a 9 percent return and believed that the offering was a low-risk, income-producing product. Clark did not conduct any analysis before selling the offering because he had sold earlier offerings of the entity and did not review the PPM because he was familiar with the earlier offering documents and assumed that this one was identical. The findings also included that unlike the earlier offerings, there were serious red flags as to the viability of the offering because the issuer was having trouble making both principal and interest payments to its investors in the earlier affiliated offerings. Clark became aware of the negative information concerning liquidity problems, delinquencies and defaults of earlier affiliated offerings that should have alerted him to the fact that the offering was also susceptible to delinquencies or default and therefore not suitable for his customers. FINRA found that Clark failed to conduct adequate due diligence and failed to have reasonable grounds to believe that the private placement offered by the entity pursuant to Regulation D was suitable for any customer in light of the fact that he was aware of the delinquencies and defaults of the entity’s earlier affiliated offerings.
The suspension is in effect from December 19, 2011, through June 18, 2012. (FINRA Case #2010022304701).