FINRA Private Placement and Variable Annuity Fraud and Breach of Fiduciary Duty Arbitration Attorney, Russell L. Forkey, Esq.
Woodrock Securities, L.P. (CRD #133653, Houston, Texas) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $10,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to ensure that investor funds from an offering were deposited into an escrow account during the offering’s contingency period. The findings stated that the firm participated in a best efforts, “minimum-maximum” offering an entity conducted, and the offering summary stated that if the minimum offering amount was not raised during the offering period, the funds held in the segregated account would be returned to the investors; but prior to the minimum offering amount being raised, the issuer withdrew and utilized funds from the bank account. The findings also stated that after only $600,000 had been raised, the issuer withdrew $199,000 and utilized the funds to make a down payment on a portfolio of defaulted auto loans so that the minimum offering amount was not obtained until a later date. The findings also included that the representation in the offering summary that investor funds would be placed in a segregated account until the minimum offering amount had been received was rendered false when the issuer utilized investor funds before the minimum offering amount was raised. (FINRA Case #2009016279401).