KCD Financial Censured and Fined by the SEC

Soreide Law Group obtained the following information on FINRA’s website:
KCD Financial, Inc. (CRD #127473, Green Bay, Wisconsin)
On May 30, 2017, a Securities and Exchange Commission (SEC) decision became final in which KCD Financial was censured and fined $73,000. The SEC sustained the findings and sanctions imposed by the National Adjudicatory Council (NAC).
These sanctions were based on findings that the firm sold at least $2 million in unregistered securities and failed to supervise its representatives’ sales of unregistered securities.
The findings stated that the unregistered securities were purported to be exempt from registration pursuant to a registration exemption under Rule 506 of Regulation D that, among other things, prohibited the issuer from engaging in a “general solicitation” or “general advertising.”
Shortly after the offering began, the issuer generated a press release concerning the launch of the investment fund, which resulted in newspaper articles that the issuer promptly posted on its affiliate’s unrestricted website. The content of the articles was designed to arouse public interest in the securities offering. The issuer’s securities attorney contacted the firm and informed it that the newspaper articles amounted to an alleged breach of the prohibition against general solicitation and advised KCD Financial that the newspaper articles should not be posted on the issuer’s website. Despite the attorney’s warning, allegedly the firm did not prohibit sales of the offering. Instead, KCD Financial took some efforts to limit sales only to accredited investors with whom the firm had a prior relationship and investors who did not see the newspaper articles, and it made ineffective attempts to have the articles removed from the affiliate’s website.
The SEC found that the firm should have directed its prompt and full attention to the breach of the prohibition against general solicitation, that stopping the unregistered sales of the offering was the only acceptable response, and that KCD Financial’s efforts to limit sales were irrelevant to whether the articles constituted a general solicitation.
(FINRA Case #2011025851501)
The complaint alleged two representatives, and one other KCD representative, offered “CD locator” services, in which they assisted investors with finding and purchasing CDs from banks and paid clients “bonuses” in the amount of the difference between the advertised CD rates and available CD rates. The KCD representatives allegedly did not sell the CDs or make any money directly from these activities. Instead, according to the allegations the purpose of the CD advertisements was to attract persons who might be interested in purchasing revenue-generating products that the representatives sold, including securities.
The complaint also made allegations concerning the offering of interests in the WRF Distressed Residential Fund 2011 LLC. The Hearing Panel found that KCD was responsible for alleged misleading CD advertisements, engaged in impermissible sales of unregistered securities, and failed to supervise those sales, in violation of FINRA rules.
If you were a client of KCD Financial and experienced investment losses due to their actions or recommendations, call Soreide Law Group and speak to a lawyer at no cost regarding the possible recovery of your losses at: 888-760-6552.
Soreide Law Group represents clients nationwide before FINRA and we operate on a contingency fee basis.  Let our experience work for you.