Regulators Issue Sanctions Against Brokers for Misconduct in Private Offerings (Reg D Offerings)


InvestmentNews has reported that FINRA has issued the first in an anticipated series of sanctions against broker-dealers and executives of firms who sold private placements in two alleged Ponzi schemes. The actions were taken against Workman Securities Corp and Askar Corp for deficient investigation and due diligence associated with the sale of high risk investments.. The investments involved were Medical Capital Holdings Inc and Provident Royalties LLC who were charged with fraud by the SEC in 2009.

Workman Securities Corp representatives sold upwards of $9 million of Provident Royalties private placements and were ordered to pay $700,000 to compensate clients, according to Bruce Kelly of InvestmentNews. It is currently unknown the amount of Medical Capital notes which were sold by the firm.

The second broker-dealer, Askar Corp, allegedly failed “to perform due diligence” on tenant-in-common private placements and was ordered to pay $45,000. The firm made approximately $578,000 from the sales of these privately placed tenant-in-common interests.

FINRA also sanctioned seven executives relating to the sales of the defunct private placements.

Some firms that were actively involved in selling private offerings (Reg D offerings) including QA3 Financial Corp, GunnAllen Financial Inc and Okoboji Financial Services have closed.

According to investors’ attorney J. Boyd Page, senior partner of Page Perry in Atlanta, “FINRA’s action highlights the high risks and dangers that investors are exposed to when they invest in private offerings. We see too many people who have lost significant portions of their life savings in these investments. Investors should always proceed with caution in evaluating these offerings. If they sound too good to be true, they probably are.”

Page Perry has over 125 years collective experience representing institutional and individual investors in private offering litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.