South Florida Arbitration & Litigation Lawyer Blog
Private Placement (Reg. D) Fraud, Misrepresentation, Selling Away, Unauthorized Outside Business Activity and Unregistered Securities FINRA Arbitration and litigation Attorney, Russell L. Forkey, Esq.
December, 2011:
Steven Mark Peaslee (CRD #2285838, Registered Principal, Alexandria, Louisiana) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Peaslee consented to the described sanction and to the entry of findings that he participated in private securities transactions by soliciting individuals to invest approximately $399,850 in an offering of a company he owned and controlled without providing written notice of his intent to participate in the sale of an offering to his member firm, and failed to obtain his firm’s written approval before engaging in such activities. The findings stated that Peaslee’s firm did not permit registered representatives to participate in the sale of private equity offerings. The offering’s purpose was to capitalize an entity through which Peaslee operated his securities business, which he wholly owned. The findings also stated that the offering purported to be issued in compliance with Rule 506 of Regulation D of the Securities Act of 1933 (Reg. D), but Reg D documents were not filed with the SEC. The findings also included that Peaslee did not receive any written representation from any of the investors that they met the requirements to be an accredited investor. FINRA found that Peaslee negligently made untrue statements of material facts and/or omitted to state material facts in a PPM and subscription agreement for the offering. In reliance on Peaslee’s misrepresentations, the customers and the non-customer invested in the offering. FINRA also found that Peaslee failed to establish an escrow account in the name of the issuer, his business entity, and no investor funds from the offering were ever held in an escrow account; rather, Peaslee deposited investor funds into the entity’s operating account and immediately began making withdrawals. In addition, FINRA determined that Peaslee distributed investor funds before the minimum contingency was satisfied, thereby rendering the representations in the offering documents false and misleading. (FINRA Case #2009020134201).