Fusion Analytics Securities LLC, a securities broker dealer headquartered in Coral Springs, Florida, has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement with defrauding investors in relation to the sale of bond offerings. Department of Enforcement v. Fusion Analytics Securities LLC, Disciplinary Proceeding No. 2018059545604 (March 7, 2022).
According to the Complaint, between January of 2017 and August of 2019, Fusion Analytics Securities, through its Managing Partner (MC) and stockbroker (EW), committed securities fraud concerning private offerings for NewCo. The Complaint alleges that NewCo was owned and operated by Promoter 1. NewCo was an affiliate of OldCo, which Promoter 1 also owned and controlled and who Fusion Analytics Securities was involved with for fundraising.
The Complaint alleges that Securities and Exchange Commission (SEC) issued an Order finding that investors, some of whom held accounts at Fusion Analytics Securities, had been misled by OldCo regarding the use of the proceeds in prior equity offerings. SEC found that millions in investor funds had been diverted by Promoter 1 from OldCo.
The Complaint states that Fusion Analytics knew of SEC’s Order at the time that it signed up to sell NewCo bond offerings. Still, the company agreed to undertake the offerings in January of 2017 for purposes of building a power plant.
Department of Enforcement contends that omissions and misrepresentations were made by Fusion Analytics when it sold the NewCo bond offerings. The regulator alleges that in the first bond offering, misleading and false statements were provided to prospective investors by Fusion Analytics Securities. The securities broker dealer did not disclose SEC’s Order to investors, so investors were not made aware of Promoter 1 and OldCo misusing investment proceeds and misleading investors. Fusion Analytics Securities also purportedly misrepresented risks and revenues relating to the offering and made misleading and false statements regarding the status of the offering.
Misleading and false statements were disseminated by Fusion Analytics Securities in the second offering regarding SEC’s Order. Materials provided to investors omitted that NewCo experienced financial problems. Newer investors were unaware of the company’s violation of debt covenants, lateness on interest payments, and the need to accumulate funds to pay interest to older investors.
$1,800,000.00 had been raised by Fusion Analytics Securities from 11 customers for the two private offerings for NewCo. $146,000.00 in commissions has been generated by the securities broker dealer.
Department of Enforcement alleges that Fusion Analytics Securities violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2020. The securities broker dealer is also accused of violating FINRA Rules 2010 and 2111 by recommending the private offerings without having any adequate basis for concluding that the offerings were suitable and for violating FINRA Rules 2010 and 8210 by providing false information to FINRA concerning the second bond offering.
