Stephen H. Watkins of Chicago Illinois a stockbroker formerly registered with Entrex Capital Market LLC has been fined $25,000.00 and suspended for five months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based in part on findings that (1) Watkins engaged in unauthorized investment related communications and (2) Watkins disseminated misleading investment information to prospective investors. Letter of Acceptance Waiver and Consent No. 2017055426201 (Apr. 12, 2019).
According to the AWC, during the time that Watkins was associated was associated with Entrex Capital Market, LLC (formerly known as Bridgeport Partners, LLC), Watkins also controlled and owned Entrex Capital Market Inc., which possessed the rights to the marketing and licensure of Top-line Income Generating Rights Certificates to certain private issuers that were looking for capital. Apparently, Entrex Capital Market Inc. and another firm, Entrex eChain, LLC, were disclosed by Watkins to Entrex Capital Market, LLC.
Evidently, Watkins utilized his Entrex Capital Market Inc. e-mail to consult with prospective investors of Entrex Capital Market, LLC. Those communications reportedly concerned the movement of customers’ funds; signings of private offering subscription agreements; and solicitations of possible investors. FINRA stated that those communications were not placed on Entrex Capital Market LLC’s records and books, conduct violative of FINRA Rules 2010 and 4511.
Additionally, from September of 2016 to December of 2017, Watkins communicated multiple times with prospective investors in a manner which FINRA deemed misleading. Particularly, between September of 2016 and November of 2016, Watkins reportedly placed information on the Entrex Capital Market Inc. website to attract investors seeking purchases of investments through private placements. Apparently, Watkins referred to future issuances of Top-line Income Generating Rights Certificates in those communications, and implied that there had already been successful offerings. Apparently, Watkins failed to detail any of the investment risks, which precluded prospective investors from properly reviewing the Top-line Income Generating Rights Certificates investment opportunities.
In another case reported by the AWC, Watkins claimed that there was a $25,000,000.00 Top-line Income Generating Rights Certificates offering involving Overstock.com; however, sales of those securities only totaled $5,500,000.00. Watkins also reportedly claimed that the Top-line Income Generating Rights Certificates offerings averaged $17,000,000.00 in value; however, Overstock.com’s offering was the only successful one. The AWC reported that Watkins exaggerated the amount of attention the Top-line Income Generating Rights Certificates were getting.
The AWC further stated that a Confidential Information Memoranda was disseminated to prospective investors in December of 2017. That Memoranda reportedly contained misleading and unwarranted claims including representations that the Top-line Income Generating Rights Certificates were safe as cash investments. Supposedly, the Memoranda also omitted information about the risks of default by an issuer. Moreover, the AWC stated that the Memoranda contained unwarranted investment performance projections and inappropriate forecasts concerning the revenues that would be generated by issuers. FINRA found that Watkins’ conduct was violative of FINRA Rules 2010 and 2210.
Watkins’ registration with Entrex Capital Market LLC has been terminated as of February 5, 2018.
