South Florida Arbitration & Litigation Lawyer Blog
FINRA Securities Private Placement Fraud and Mismanagement Attorney, Russell L. Forkey, Esq.
January, 2011:
Cambridge Legacy Securities, L.L.C. (CRD #103722, Dallas, Texas) and Tommy Edward Fincher (CRD #1725266, Registered Principal, Mesquite, Texas) submitted a Letter of Acceptance Waiver and Consent in which the firm was censured and ordered to pay $218,400 in restitution to customers. If the firm fails to provide FINRA with proof of restitution, it shall immediately be suspended from FINRA membership until such proof has been provided. Fincher was fined $5,000 and suspended from association with any FINRA member in any principal capacity for six months.
Without admitting or denying the findings, the firm and Fincher consented to the described sanctions and to the entry of findings that the firm failed to have reasonable grounds to believe that a private placement offered pursuant to Regulation D was suitable for any customer; and, acting through Fincher, its Chief Compliance Officer and registered principal, the firm failed to conduct adequate due diligence of the private placement offering before allowing its brokers to sell the security. The findings stated that Fincher was the principal responsible for conducting due diligence on the offering and approved the security as a new product available for firm brokers to sell to their customers; he allowed the firm’s brokers to continue selling the security despite its ongoing failure to make overdue interest and principal payments. The findings also stated that the firm failed to have reasonable grounds for allowing the continued sale of the security even though the firm, through Fincher, was aware of numerous red flags concerning liquidity problems, delinquencies and defaults, but allowed its brokers to continue selling the security. The findings also included that the firm, acting through Fincher, failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations, and failed to enforce reasonable supervisory procedures to detect or address potential red flags as it related to the offering.
Fincher’s suspension is in effect from January 3, 2011, through July 2, 2011. (FINRA Case #2009020319001)