Jorge A. Reyes of Miami Florida a stockbroker formerly registered with CP Capital Securities has been charged by Financial Industry Regulatory Authority (FINRA) in a Complaint alleging that between May of 2013 and August of 2016, Reyes (1) utilized misleading materials to market private placements (2) advised a customer to purchase a private placement that was not suitable for the customer (3) neglected to conduct due diligence on the private offerings (4) converted a customer’s funds and (5) engaged in fraud when selling the private offerings. Department of Enforcement v. Jorge A. Reyes Disciplinary Proceeding No. 2016051493704 (Dec. 11, 2018).
According to the Complaint, Reyes made fraudulent omissions and misrepresentations concerning unregistered Regulation D securities sales. Those securities were reportedly issued by three entities which CP Capital Securities Inc. affiliated with. Apparently, Reyes claimed that those investments were safe; however, the investments reportedly contained considerable risks. The Complaint stated that Reyes also neglected to inform investors that two of the offerings were self-offerings meant to finance CP Capital Securities Inc. and its parent.
The Complaint alleged that Reyes’s actions contributed towards eighteen of CP Capital Securities’ customers losing the entirety of the $4,219,000.00 that they invested in those offerings. Moreover, the investors were allegedly left without any interest that was supposed to be paid to them by investing in the promissory notes. Consequently, FINRA Department of Enforcement stated that Reyes’ conduct was willfully violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2020. Alternatively, FINRA Department of Enforcement stated that Reyes contravened Securities Act of 1933 Section 17(a)(2) and 17(a)(3), and violated FINRA Rules 2010 by engaging in fraudulent activities in reference to the offering.
The Complaint further alleged that Reyes converted $170,000.00 belonging to a firm customer. Specifically, Reyes told RS – a customer who established a CP Capital Securities account for RMInc. – that Reyes would use those funds for the establishment of an off-shore investment fund and for financing the firm’s off-shore investment banking transaction. Apparently, Reyes’ misrepresentations in this regard induced RS and his company to transfer funds to an account Reyes controlled. Then, Reyes allegedly used those funds to pay down his expenses. The Complaint alleged that Reyes failed to return the money belonging to RS and his company. Consequently, FINRA Department of Enforcement stated that Reyes converted the customer’s funds; conduct violative of FINRA Rules 2010 and 2150.
The Complaint further alleged that Reyes failed to undertake reasonable due diligence with respect to the offerings. Supposedly, Reyes had no adequate foundation to conclude that his recommended securities were appropriate for customers. FINRA Department of Enforcement stated that Reyes’ conduct was violative of FINRA Rules 2010 and 2111 as a result.
The Complaint additionally stated that Reyes advised NR – a firm customer – to make a $1,452,000.00 investment in three risky, illiquid and unregistered offerings. Apparently, NR established the account in the name of an entity, BTLLC, which was utilized as NR’s personal investment vehicle. FINRA Department of Enforcement stated that Reyes’ unsuitable recommendations in this respect were violative of FINRA Rules 2010 and 2111.
Even further, FINRA stated that Reyes authored and utilized misleading marketing materials when soliciting customers’ investments in the offerings. Apparently, the marketing materials were riddled with misrepresentations and omissions, and did not enable customers to have an adequate basis to make an investment evaluation. FINRA Department of Enforcement alleged that Reyes’ use of those unbalanced and unfair materials was violative of FINRA Rules 2010 and 2210.
FINRA Public Disclosure confirms that Reyes is the subject of a customer initiated investment related civil action where the customer sought $1,452,000.00 in damages founded on accusations that Reyes misrepresented promissory notes issued by CP Venture Capital I, CP Venture Capital II and CP US Income Group by claiming that the investments were not promissory notes and that the customer would be able to access the invested monies at any point. Civil Action No. 2016-024809-CA-01 (Oct. 24, 2016).
Reyes’ registration with CP Capital Securities has been terminated as of June 24, 2017. FINRA Public Disclosure additionally reveals that CP Capital Securities was expelled by FINRA on July 31, 2017.
