Did Your Cova Capital Broker Unsuitably Sell You Private Placements? Contact Our Alternative Investment Loss Recovery Lawyers Today
Shepherd Smith Edwards and Kantas (investorlawyers.com) is speaking to investors who sustained losses in private placement offerings that were sold to them by Cova Capital Partners. The broker-dealer was sanctioned by the Financial Industry Regulatory Authority (FINRA) and ordered to pay a $30K fine.
FINRA contends that between June 2018 and December 2021, Cova purportedly recommended three private placements to retail investors but neglected to perform the necessary due diligence to have reasonable grounds for thinking the offerings were suitable or in the best interests of at least some of the customers.
The private placements include:
- More than $2M in pre-IPO shares of a company. FINRA contends that Cova did not verify that the issuer had rights to the shares and, also, purportedly failed to properly evaluate markup charges.
- $1.7M in a private placement while failing to properly investigate the CEO of the issuer. This individual had a history of regulatory violations.
- $9M in pre-IPO shares, even as the broker-dealer allegedly neglected to look into US Securities and Exchange Commission (SEC) charges involving people who were connected to funds that were sourcing the shares.
FINRA also said that Cova Partners neglected to set up, keep up, and enforce a supervisory system reasonably designed to be able to comply with its best interest and suitability obligations related to the sale of private placements.
Shepherd Smith Edwards and Kantas represent private placement investors whose brokers unsuitably recommended these high-risk, illiquid, non-transparent, unregulated investments to them. Contact us today to schedule your free, initial case consultation.
What Are Private Placements and Why Are They Unsuitable For Many Investors?
This is a securities offering that doesn’t have to be registered with the US Securities and Exchange Commission (SEC) or any state securities regulator. Private placements are often offered by entities that qualify for these registration exemptions. This can allow them to not have to comply with certain regulations, including disclosure requirements that are supposed to protect investors from investment fraud.
It is important to note that there are a lot of legitimate private placements out there. However, with little regulation and oversight, it is essential for brokers to conduct the necessary due diligence to ensure no fraud is taking place and any recommendation of this kind of investment is appropriate for an investor.
Private placement should only be sold to accredited, experienced investors. Unfortunately, that isn’t always the case. The lure of high commissions and fees can compel brokers to ignore customers’ best interests, including that of retail investors and conservative seniors who may end up being sold these unregistered securities that were too risky for them from the start.
Many of us are former brokers who left that industry because of a lot of the unsavory practices we witnessed. It is why our securities law firm has spent 30 years dedicating our legal practice to fighting for investors in helping to make them financially whole again.
Contact Our Alternative Investment Loss Recovery Lawyers Today:
Call (800) 259-9010 today.