Iowa Principal Broker Fined and Suspended by FINRA for Lack of Due Diligence For Private Offerings

Soreide Law Group, a Securities Arbitration Law Firm, (888) 760-6552, obtained the following information on FINRA’s website under “Disciplinary and Other FINRA Actions, July, 2013.”

Gary Mitchell Spitz (CRD #1828144, Registered Principal, Fairfield, Iowa)

was fined $5,000 and suspended from association with any FINRA member in any principal capacity for one year. Without admitting or denying the findings, Spitz consented to the described sanctions and to the entry of findings that as the firm’s principal, he failed to conduct adequate initial and ongoing due diligence of an entity, a Regulation D, Rule 506 private offering of up to $2,000,000, as required by his member firm’s WSPs.

FINRA's findings stated that as a result of Spitz’s deficient review, he failed to ensure that the offering memorandum contained audited financials of the issuer, and did not ensure that audited financials were available to the non-accredited investors prior to the time of sale, which is a requirement of Regulation D.

Also, FINRA's findings stated that Spitz permitted some registered representatives, who associated with the firm in order to sell shares of the entity, to submit offering documents executed by customers directly to the entity. As a result, Spitz neither received copies of those documents, nor conducted a suitability review of the transactions prior to their execution. Some customers invested in the entity before Spitz received the subscription documents from the representatives. Spitz failed to take steps to ensure that these representatives selling the entity’s shares made a reasonable effort to obtain information concerning the customers’ financial status, investment objectives and risk tolerance.

The findings also included that Spitz failed to review or retain email correspondence for these representatives who associated with the firm to sell the entity’s shares. These representatives were also employees of a company, the manager of the entity. Spitz permitted these representatives to use an email address of the company to communicate with prospects and customers, and the firm’s server did not capture these emails. There weren’t any procedures in place to ensure that the dually employed representatives forwarded email correspondence from outside email accounts to Spitz for review and retention. As a result, the representatives made exaggerated, unwarranted, and potentially misleading statements to customers and prospects.
The suspension is in effect from June 3, 2013, through June 2, 2014.
(FINRA Case #2012030787301)

According to FINRA's BrokerCheck, Gary Mitchell Spitz is currently employed by and registered with the following FINRA Firm(s):

MIDAMERICA FINANCIAL SERVICES, INC.
1703 KOSOLA AVE
SUITE B-1
FAIRFIELD, IA 52556
CRD# 47351
Registered with this firm since: 1/19/2012

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

MT RUSHMORE SECURITIES LLC
CRD# 130955
FAIRFIELD, IA
08/2004 - 01/2013

CAPITAL MANAGEMENT PARTNERS, INC.
CRD# 21973
FAIRFIELD, IA
02/1999 - 09/2004

ANGLO-AMERICAN INVESTOR SERVICES CORP.
CRD# 14278
CHARLOTTESVILLE, VA
01/1998 - 02/1999

This ends the information obtained on FINRA’s website.

Call Soreide Law Group for a free consultation with an attorney on how to potentially recover your losses: 888-760-6552.