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TAG | private placement memorandum

May/13

20

FINRA Suspends Tampa Rep

Comments off · Posted by Securities Lawyer in FINRA

The following information appeared on FINRA’s website under “Disciplinary and Other FINRA Actions, May, 2013.”

Ronald Wayne Lankford (CRD #1751588, Registered Principal, Tampa, Florida)

was suspended from association with any FINRA member firm in any principal capacity other than as a FINOP (Series 27) and Introducing Broker-Dealer/FINOP (Series 28) for 18 months; suspended from association with any FINRA member firm in a principal capacity as a FINOP (Series 27) and Introducing Broker-Dealer/FINOP (Series 28) for one month; and ordered to re-qualify as a principal by passing the required examination(s) before re-associating with any member firm in that capacity. In light of Lankford’s financial status, no monetary sanction has been imposed.

Without admitting or denying the allegations, Lankford consented to the described sanctions and to the entry of findings that he was aware of and permitted the sales of unregistered promissory notes by his member firm’s representatives, failed to ensure that the notes were either registered or exempt from registration, and failed to ensure that all material facts were disclosed to investors who were offered and sold the promissory notes.

FINRA’s findings stated that when a preferred stock private placement offering began, Lankford, as his firm’s president and CCO, was responsible for approving the private placements and for conducting due diligence, but failed to conduct adequate due diligence regarding the preferred stock offering to ensure that the PPM disclosed all material facts to investors.

When subsequent material events occurred, Lankford did not suspend sales of the preferred stock pending the creation and receipt of an amended PPM (Private Placement Memorandum is document explaining a new offering of securities for private placement), and instead allowed the continued sale of the preferred stock by representatives using the original PPM without any amendment.

FINRA’s findings also stated that Lankford had the overall supervisory responsibility for the sales representatives and the firm’s sales activities, and allowed firm representatives to sell the preferred stock with a PPM that had material misrepresentations and omitted material facts. Lankford admitted to FINRA that although he was responsible for supervision of the firm’s OSJ principal, he did not discharge this responsibility. Lankford failed to supervise representatives selling the preferred stock to ensure all material facts were adequately and accurately disclosed to investors.

FINRA’s findings also included that Lankford, as the firm’s president, CCO and FINOP, allowed it to engage in a securities business while failing to maintain its minimum net capital. FINRA found that Lankford failed to make and keep a current and accurate general ledger that showed all of the firm’s liabilities, and prepared inaccurate net capital computations for the firm.

The suspension in a principal capacity as a FINOP (Series 27) and Introducing Broker-Dealer/FINOP (Series 28) was in effect from April 1, 2013, through April 30, 2013. The suspension in any principal capacity (other than as a FINOP (Series 27) and Introducing Broker-Dealer/FINOP (Series 28) is in effect from April 1, 2013, through September 30, 2014. (FINRA Case #2010020829803)

According to FINRA’s BrokerCheck, Ronald Wayne Lankford is currently employed by and registered with the following FINRA Firm:

SPARTAN SECURITIES GROUP, LTD.
15500 ROOSEVELT BOULEVARD, SUITE 303
CLEARWATER, FL 33760
CRD# 104478
Registered with this firm since: 2/14/2012

This broker was previously registered with FINRA at the following brokerage firms:

SAGE SOUTHEASTERN SECURITIES, INC.
CRD# 144051
ATLANTA, GA
02/2010 – 09/2011

FIRST LEGACY SECURITIES, LLC
CRD# 47079
VESTAVIA HILLS, AL
09/2007 – 03/2010

JONES, BYRD, & ATTKISSON, INC.
CRD# 36268
ATLANTA, GA
04/2006 – 02/2008

This ends the information obtained on FINRA’s website.

Soreide Law Group, PLLC, represents clients nationwide before FINRA. Call for a free consultation with on how to potentially recover your losses. To speak with an attorney call 888-760-6552

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Nov/11

15

FINRA Takes Actions Against Brookstone Securities, Inc., of Lakeland FL and Three of It’s Representative

Comments off · Posted by Securities Lawyer in FINRA

Brookstone Securities, Inc. (CRD® #13366, Lakeland, Florida), David William Locy (CRD #4682865, Registered Principal, Overland Park, Kansas), Mark Mather Mercier (CRD #1884246, Registered Principal, Lutz, Florida) and Antony Lee Turbeville (CRD #1721014, Registered Principal, Lakeland, Florida)

submitted Offers of Settlement in which the firm was censured and fined $200,000; Locy was fined $10,000 and suspended from association with any FINRA member in any principal capacity for three months, Mercier was fined $5,000 and suspended from association with any FINRA member in any principal capacity for three months, and Turbeville was fined $10,000 and suspended from association with any FINRA member in any principal capacity for three months. Mercier’s fine must be paid either immediately upon his reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.

Without admitting or denying the allegations, the respondents consented to the described sanctions and to the entry of findings that registered representatives, while associated with the firm, made misrepresentations or omissions of material fact to purchasers of unsecured bridge notes and warrants to purchase common stock of a successor company.

 These findings stated that the registered representatives guaranteed customers that they would receive back their principal investment plus returns, failed to inform investors of any risks associated with the investments and did not discuss the risks outlined in the private placement memorandum (PPM) that could result in them losing their entire investment.

These registered representatives had no reasonable basis for the guarantees given the description of the placement agent’s limited role in the PPM. The findings further stated that the registered representatives provided unwarranted price predictions to customers regarding the future price of common stock for which the warrants would be exchangeable and guaranteed the payment at maturity of promissory notes, which led customers to believe that funds raised by the sale of the anticipated private placement would be held in escrow for redemption of the promissory notes. The findings also stated that the firm, acting through a registered representative, made misrepresentations and/or omissions of material fact to customers in connection with the sale of the private placement of firm units consisting of Class B common stock and warrants to purchase Class A common stock; the PPM stated that the investment was speculative, involving a high degree of risk and was only suitable for persons who could risk losing their entire investment.

These findings also included that the representative represented to customers that he would invest their funds in another private placement and in direct contradiction, invested the funds in the firm private placement.

2 Disciplinary and Other FINRA Actions
 
FINRA found that the representatives recommended and effected the sale of these securities without having a reasonable basis to believe that the transactions were suitable given the customers’ financial circumstances and conditions, and their investment objectives. FINRA also found that the representative recommended customers use margin in their accounts, which was unsuitable given their risk tolerance and investment objectives, and he exercised discretion without prior written authorization in customers’ accounts.
 
Additionally, FINRA determined that the firm, acting through Locy, its chief operating officer (COO) and president, failed to reasonably supervise the registered representative and failed to follow up on “red flags” that should have alerted him to the need to investigate the representative’s sales practices and determine whether trading restrictions, heightened supervision or discipline were warranted.  FINRA found that despite numerous red flags, the firm took no steps to contact customers or place the representative on heightened supervision, although it later placed limits only on the representative’s use of margin. The firm eventually suspended his trading authority after additional large margin calls, and Locy failed to ensure that the representative was making accurate representations and suitable recommendations.
 
Also, FINRA found that Turbeville, the firm’s chief executive officer (CEO), and Locy delegated responsibility to Mercier, the firm’s chief compliance officer (CCO), to conduct due diligence on a company and were aware of red flags regarding its offering but did not take steps to investigate. The findings also stated that the firm, acting through Turbeville, Locy and Mercier, failed to establish, maintain and enforce supervisory procedures reasonably designed to prevent violations of NASD Rule 2310 regarding suitability; under the firm’s written supervisory procedures (WSPs), Mercier was responsible for ensuring the offering complied with due diligence requirements but performed only a superficial review and failed to complete the steps required by the WSPs; Locy never evaluated the company’s financial situation and was unsure if a certified public accountant (CPA) audited the financials, and no one visited the company’s facility.
 
These findings also included that neither Turbeville nor Locy took any steps to ensure Mercier had completed the due diligence process.
FINRA found that Turbeville and Locy created the firm’s deficient supervisory system; the firm’s procedures were inadequate to prevent and detect unsuitable recommendations resulting from excessive trading, excessive use of margin and over-concentration; principals did not review trades or correspondence; and the firm’s new account application process was flawed because a reviewing principal was unable to obtain an accurate picture of customers’ financial status, investment objectives and investment history when reviewing a transaction for suitability. FINRA also found that the firm’s procedures failed to identify specific reports that its compliance department was to review and did not provide guidance on the actions or analysis that should occur in response to the reports; Turbeville and Locy knew, or should have known, of the compliance department’s limited reviews, but neither of them took steps to address the inadequate system.
 
Mercier’s suspension is in effect from October 3, 2011, through January 2, 2012. Locy’s and Turbeville’s suspensions are in effect from October 17, 2011, through January 16, 2012. (FINRA Case #2009017275301)

This information appeared on FINRA’s website under ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced a loss through Brookstone Securities, Inc., David William Locy, Mark Mather Mercier, or Antony Lee Turbeville, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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