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ARTICLE · 23 FEBRUARY 2015

What FINRA Is Doing About Private Placements

Fox Rothschild LLP
Fox Rothschild LLP
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FINRA recently censured and fined a broker-dealer $175,000.00 for failing to perform appropriate due diligence and supervision regarding private placements that the firm and its registered representatives offered.

United StatesCorporate/Commercial Law
Joshua Horn
Joshua Horn
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FINRA recently censured and fined a broker-dealer $175,000.00 for failing to perform appropriate due diligence and supervision regarding private placements that the firm and its registered representatives offered. This penalty should serve as a wake-up call that FINRA is taking a sharp look at the due diligence that firms perform before and after offering a private placement to its clients.

The firm had a number of missteps regarding a handful of private placements that FINRA discovered during a routine examination, which included the following:

  1. The firm approved an offering even though the firm highlighted shortcomings in the offering such as a failure to describe the company's business; FINRA found the firm providing additional disclosures did not satisfy Rule 2111.

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