Jorge A. Reyes (also known as Jorge Quiroz and as George Reyes) of Miami Florida a stockbroker formerly registered with CP Capital Securities has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to a FINRA National Adjudicatory Council Decision containing findings of Reyes converting funds, making fraudulent misrepresentations, and making unsuitable recommendations to customers during the period that he was associated with CP Capital Securities. Letter of Acceptance Waiver and Consent No. 2016051493704 (October 7, 2021).
FINRA’s National Adjudicatory Council Decision comes as a result of Reyes appealing a FINRA Extended Hearing Panel Decision. That Hearing Panel determined that when Reyes was associated with CP Securities, he violated FINRA rules and federal securities laws. Reyes was found to have fraudulently misrepresented and omitted information to CP Securities customers in regard to promissory notes that had been issued by CP Venture Capital LLC (CP Venture I), CP Venture Capital II LLC (CP Venture II), and CP US Income LLC (CP Income). Those issuers were affiliated with CP Securities.
Reyes violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2020 for fraudulent misrepresentations and omissions. The regulator noted that Reyes misrepresented facts relating to the investment’s quality and safety, claiming that the notes were safe like fixed-income securities when they were high risk and illiquid. Reyes also failed to explain to some customers who bought the notes that their money would be used to help finance CP Capital Group and CP Securities and that those entities were in serious financial trouble and relied upon the funds raised from the notes to stay afloat.
He was also found to have converted or improperly used a customer’s funds in violation of FINRA Rules 2010 and 2150. The regulator determined that he misrepresented information relating to his conversion of $170,000.00 in funds supposed to be used for investments. Reyes used the money for his expenses, personal trips, and alimony.
The Hearing Panel also found that Reyes made unsuitable transactions. He did not have an adequate basis for concluding that promissory notes were suitable for a particular customer. This is because the customer had limited experience, minimal risk tolerance, and needed to preserve assets. That customer was advised to invest $1,452,000.00 (more than half of their net worth) in these investments. Reyes violated FINRA Rules 2010 and 2111 for this reason.
The regulator also found that promissory notes had been improperly marketed by Reyes. He was only permitted to use fair and balanced communications, which allowed investors to make an informed decision on the investment opportunity. Reyes did not identify the risks on promissory notes in the marketing materials concerning CP Venture I, CP Venture II, and CP Income.
The regulator also noted that Reyes made unwarranted, exaggerated, misleading, and false statements within the marketing documents pertaining to the promissory notes. FINRA pointed out that these materials falsely suggested that the notes were safe and that the investments underlying the notes would be secured. He violated FINRA Rules 2010 and 2210.
FINRA indicated that investors collectively incurred approximately $4,000,000.00 in losses because of being defrauded by Reyes.
FINRA Public Disclosure shows that Reyes is the subject of a customer initiated investment related civil action. The customer requested $1,452,000.00 in damages founded upon allegations of being sold fraudulent promissory notes issued by CP Venture I, CP Venture II, and CP US Income Group. Civil Action No. 2016-024809-CA-01 (October 24, 2016).
