Lee R. Sobel of Redlands, CA, a former direct participation programs representative with Equinox Securities, Inc., was charged by FINRA Department of Enforcement in a Complaint containing allegations that Sobel failed to appear for an on-the-record interview in connection with FINRA’s investigation of Sobel’s offer and sale of private placements during his employment with Equinox from February – August 2013, in potential violation of NASD, FINRA, and federal securities laws. Dept. of Enforcement v. Sobel No. 2014038991402 (Filed July 20, 2015).
The Complaint
According to the Complaint, FINRA staff requested that Sobel appear for an on-the-record interview (“OTR”) on April 6, 2015, in connection with FINRA’s investigation into the sale of private placement interests in the Opportunity Drilling and Acquisition Fund, LLC (“ODAF”) offered by Equinox from April 2013 – August 2013. The Complaint indicates that FINRA made multiple requests to contact Sobel regarding their investigation but to no avail. When FINRA staff finally got in touch with Sobel, Sobel would not confirm whether he would appear for testimony. According to the Complaint, Sobel ultimately failed to appear for the scheduled testimony on June 2, 2015. FINRA is seeking that the Panel find that Sobel committed violations alleged in the Complaint, and that sanctions be imposed.
FINRA registered representatives like Sobel who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
The Sale of Unregistered Securities
A private placement is an offer or sale of unregistered securities that are not the subject of a registration statement filed with the United States Securities Exchange Commission pursuant to the Securities Act of 1933. As a general matter, the sale of such unregistered securities, absent limited exemptions, is a crime. Limited exemptions, such as Regulation D offerings, still require broker-dealers to conduct a reasonable investigation into offerings and maintain supervisory and record keeping procedures under FINRA Rule 3010 in order to ensure securities are suitable for customers.
Public Disclosure Records
Public disclosure records reveal that Sobel was subject to a criminal disposition in September, 1985, for unlawful conditioning of offer or gifts, a misdemeanor which resulted in a $240 fine and 36 months probation. Public records also show that Sobel was subject to at least 1 customer dispute (closed / no action) in which fraud was alleged in the North Corvette Drilling Program.
Guiliano Law Group
Investors suffering losses or damages caused by Sobel and Equinox in connection with his aforementioned conduct may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
