Investor Lawyers Blog
Investment attorneys have been on the lookout for investors who have been wronged and suffered losses as the result of brokers or firms misrepresenting and/or recommending private placements without a reasonable basis. On November 29, the Financial Industry Regulatory Authority (FINRA) announced that it would sanction ten individuals and eight firms for doing just that. In addition, FINRA ordered a total of more than $3.2 million in restitution.
According to FINRA’s press release, “the broker-dealers did not have adequate supervisory systems in place to identify and understand the inherent risks of these offerings and, as a result, many of the firms failed to conduct adequate due diligence of these offerings. In addition, some of the firms did not have reasonable grounds to believe that the private placements were suitable for any of their customers.”
This is not the first time that firms have been punished for this type of securities fraud — and it won’t be the last. FINRA sanctioned seven individuals and two firms in April 2011 and, as was seen in the earlier blog post, “A Notice to LaeRoc Income Funds Investors,” future securities arbitration against LaeRoc may involve similar misconduct.