FINRA Fines and Suspends Rep, William Coons

The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, March, 2013.”

William Howard Coons (CRD #2049465, Registered Supervisor, West Hartford, Connecticut)

was fined $10,000 and suspended from association with any FINRA member in any capacity for 20 business days.
Without admitting or denying the findings, Coons consented to the described sanctions and to the entry of findings that he negligently omitted material facts and made material misstatements in connection with his sale of approximately $2 million in promissory notes issued by his member firm’s parent company.

FINRA's findings stated that Coons did not adequately understand the present financial condition of the issuer, or its ability to make payments on the notes, when he sold the notes. Coons was not provided with a private placement memorandum or financial statements of the issuer prior to selling the notes. Coons was provided with financial statements of the issuer’s two broker-dealer subsidiaries, but these results omitted the substantial debt and other expenses that caused the consolidated entity to operate at a loss.

FINRA's findings also stated that Coons conducted his own due diligence on the issuer’s business plan and future prospects, and spoke to the heads of the issuer’s existing and anticipated new business lines, but relied
on statements by his firm’s president and CEO to develop his understanding of the issuer’s financial results. As a result, Coons failed to adequately understand or disclose the issuer’s actual financial condition to his customers when he sold them the notes.

These findings also included that while Coons was selling the notes, the issuer defaulted on the notes that it
had issued to retail investors and had also missed interest payments owed to at least some note holders, and had, for several years, failed to make interest payments to retail investors who had purchased the company’s preferred stock. Coons did not understand these facts and did not disclose them to his customers.

FINRA found that in some instances, Coons negligently misstated the issuer’s financial condition. Coons told certain customers that the issuer was breaking even and that the company’s cash flow could service both its current and existing debt. Coons did not have a reasonable basis for making these statements. In fact, the issuer was losing money and was unable to service its existing debt. FINRA also found that in some instances, Coons provided customers with historical financial statements of the issuer’s broker-dealer subsidiaries
that did not include the separate results of the issuer, so the financial statements Coons provided to certain customers were materially misleading.

In addition, FINRA determined that although Coons did tell potential investors that they could lose their entire investment,he min imized the likelihood of this happening, and failed to disclose facts indicating the
likelihood of a default on the notes he was selling. Moreover, FINRA found that after the issuer defaulted on the notes, those investors who agreed to sign releases and invest additional funds in a related enterprise were returned the principal and interest they invested. To date, other investors who purchased the note from other brokers have not received the return of their principal and interest.

The suspension is in effect from February 19, 2013, through March 18, 2013. (FINRA Case #2011026346205)

The following information is from FINRA's BrokerCheck:

Coons is currently employed by and registered with the following FINRA Firm(s):
HALLMARK INVESTMENTS, INC.
6 EAST 39TH STREET
NEW YORK, NY 10016
CRD# 135003
Registered with this firm since: 10/21/2010

This broker was previously registered with FINRA at the following brokerage firms:
MONARCH FINANCIAL CORPORATION OF AMERICA
CRD# 23437
NEW YORK, NY
10/2010 - 10/2010

WESTROCK ADVISORS, INC.
CRD# 114338
NEW YORK, NY
06/2009 - 10/2010

MAXIM GROUP LLC
CRD# 120708
NEW YORK, NY
10/2002 - 07/2009

This ends the information from FINRA's website.

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