Broker-Dealer Ordered to Pay Customers More Than $625K in Restitution
The Financial Industry Regulatory Authority (FINRA) sanctioned National Securities Corporation for about $9M, including $4.77M disgorgement in net profits. The broker-dealer allegedly tried to artificially impact the market for GPB private placements involving several public offerings while serving as the underwriter. GPB Capital Holdings is accused of operating a more than $1.7B Ponzi scam that defrauded over 17,000 investors.
National Securities must pay over $625K in restitution for allegedly not disclosing certain material information to customers who bought GPB private placements. FINRA fined the firm $3.6M for alleged broker misconduct and other violations.
According to the self-regulatory organization (SRO), National Securities allegedly violated securities industry rules in three initial public offerings and seven follow-on offerings. The broker-dealer “unlawfully induced” or tried to induce customers to buy stock before completing the offerings in the aftermarket.
Violations allegedly included:
- “Expressly conditioning allocations on a branch manager’s or representative’s agreement” to have customers purchase a certain number of shares in the aftermarket;
- Consenting to solicit customers who obtained allocations to buy more shares;
- Threatening to lower allocations to those who would not consent to solicit customers’ involvement in the aftermarket.
The settlement resolves several charges, including that the firm allegedly:
- Didn’t tell investors in two GPB-related offerings about delays in the issuer’s public filings;
- Failed to secure locates for more than thirty thousand short sale transactions;
- Neglected to reasonably supervise one of its financial advisors who tried to get around concentration level limits;
- Made misrepresentations about stock warrants sales related to one public offering.
National Securities is not agreeing to or denying the charges.
FINRA Fines United Planners Over GPB Sales
Also, in June 2022, FINRA fined United Planners’ Financial Services of America $40K for its allegedly negligent sale of GPB private placements. This happened in the wake of GPB Capital’s failure to issue 2018 audited financial statements.
The brokerage firm also failed to notify certain investors about this. United Planners settled without denying or agreeing to the findings and consented to pay restitution of $37K plus interest.
Seasoned GPB Private Placement Lawyers
Brokerage firms that sold investments in the GPB Funds made more than $165M in commissions and other fees. Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) represent many of the investors that suffered losses.
If you suffered losses in GPB private placements after a recommendation from your National Securities broker, call SSEK Law Firm at (800) 259-9010 today.