On the website of the Financial Industry Regulatory Authority (FINRA), it was announced August 23, 2012, that FINRA fined Rodman & Renshaw LLC $315,000 for supervisory and other violations relating to the interaction between the firm’s research and investment banking functions. Rodman’s former CCO, William A. Iommi Sr., was fined $15,000, suspended from acting in a principal capacity for 90 days and must requalify as a general securities principal. FINRA also found that the firm’s supervisory system was deficient, which resulted in at least two incidents where a research analyst participated in efforts to solicit investment banking business, and another incident where a research analyst attempted to arrange a payment from a public company.

Rodman & Renshaw, the New York-based broker-dealer subsidiary of Direct Markets Holdings Corp., according to FINRA, provides investment banking services, including Private Investments in Public Entities (PIPEs) and registered direct offerings, to public and private companies. It also provides research, sales and trading services to institutional investors and therefore must have supervisory and compliance procedures to monitor potential conflicts of interest between research and investment banking, given concerns that research analysts could be pressured to tailor their coverage to the interests of a firm’s current or prospective investment banking clients.

FINRA found that from January 2008 to March 2012, Rodman & Renshaw failed to have an adequate supervisory system to monitor interactions between its investment banking and research functions. Rodman & Renshaw failed to prevent research analysts from soliciting investment banking business.

On FINRA’s website, Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “The deficiencies in Rodman’s supervisory system created an environment in which the conflict of interest between research and investment banking was left unmanaged. FINRA will continue to ensure that firms have adequate supervisory systems tailored to the firm’s business and we will continue to sanction firms that demonstrate a weak culture of compliance and internal controls.”

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. Call for a free consultation on how you could potentially recover your financial losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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In a recent SEC complaint, there were allegations made against The Nutmeg Group, LLC, and others, that Nutmeg has invested fund assets almost entirely in private investments in public equity (“PIPE”) transactions. Nutmeg was an investment adviser of 15 funds.  The SEC alleges in it’s complaint that Nutmeg improperly commingled investor and fund assets, and misappropriated over $4 million in fund assets, failed to maintain the required books and records, and overstated the performances of its funds to investors.  The SEC complaint also alleges that Nutmeg provided false information about the investors’ cash holdings, during every quarter of 2008.

The SEC has filed civil fraud claims in Illinois against The Nutmeg Group, LLC, Randall Goulding, Nutmeg’s owner and managing member, and by David Goulding, Nutmeg’s Chief Compliance Officer, and others involved.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have investment losses with The Nutmeg Group, LLC, please call for a free consultation on how to potentially recover those losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide.

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In a September 29, 2011 article in the InvestmentNews.com, Andrew Osterland writes that the Securities and Exchange Commission (SEC) filed charges against unregistered Long Island investment adviser Corey Ribotsky for allegedly lying about the performance of his investment strategies and stealing more than $1 million from one of the hedge funds he managed.

According to the SEC complaint allegedly Ribotsky stole from his investors and falsely assured them that his “struggling hedge funds were thriving,” Robert Khuzami, Director of the SEC’s Division of Enforcement, said in a statement. Mr. Ribotsky, through his firm The NIR Group, managed as much as $876 million in four hedge funds investing in private investments in public equities (PIPEs) between 2004 and 2009. He “misappropriated” over $1 million from one of those funds — the AJW Qualified Partners LLC Fund, to buy “such luxury items as a Lexus, Mercedes, and Rolex watch.”

“This, however, was a practical impossibility under the investment and trading strategy that NIR touted, given the size of the AJW Funds’ PIPE investments and the adverse market conditions at the time,” the complaint stated

These false and misleading statements, writes Osterland, that the commission alleges Mr. Ribotsky made relate to assurances he gave investors between 2007 and 2009 that he could liquidate the PIPE investments over a three- to four-year period.

According to the SEC complaint, Mr. Ribotsky’s strategy was to invest in convertible debentures of microcap — often distressed companies trading on the Pink Sheets (or OTC Link as it is now called). According to the complaint, the AJW funds often were entitled to receive billions of shares in companies that had very thin trading volume, making it impossible to sell the shares in the open market. Mr. Ribotsky suspended investor redemptions in October 2008, and in March it informed investors in the AJW Funds that NIR was going to unwind and liquidate the AJW Funds.

The InvestmentNews.com article continues with the SEC also alleges that in the fourth quarter of 2008, Mr. Ribotsky “purported to sell $43.2 million” of the fund’s assets to a third party to show investors that the firm was still generating cash. The third party, however, paid with a promissory note on which he later defaulted. Mr. Ribotsky also allegedly sent out false documents to investors with the help of an employee, Daryl Dworkin, who was also charged in the complaint.

The article states that the SEC is asking for a judgment enjoining Mr. Ribotsky and his firm from further violations of securities laws, disgorgement of profits and interest as well as monetary penalties.

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