M. Holdings Securities Inc. a brokerage firm headquartered in Portland Oregon has been censured and fined $135,000.00 by Financial Industry Regulatory Authority (FINRA) based upon the firm’s consent to findings that it failed to adequately supervise private securities transactions as well as the dissemination of consolidated reports. Letter of Acceptance Waiver and Consent No. 2017052293001 (July 9, 2018).
According to the AWC, on June 29, 2015, a registered representative of the firm, MS, sought to effect a private securities transaction away from the firm. Apparently, MS’s private securities transaction pertained to a private offering of limited partnership interests within a real estate venture. The AWC stated that MS was authorized to pursue the transactions away from the firm; however, the firm neglected to adequately monitor the interests sold through the private offering.
The AWC revealed that twenty non-firm investors had been solicited by MS between July 11, 2015 and July 22, 2015 to buy $18,755,000.00 worth of limited partnership interests within the commercial real estate project, where those activities were not supervised in any manner by the firm. Moreover, none of the twenty transactions had been kept on the firm’s records and books.
The AWC stated that the firm had eventually been examined by FINRA, in which it was probed about MS’s private securities transactions having been approved by the firm. The AWC stated that it was only at that point that the firm conducted a review of the twenty transactions. FINRA found that the firm’s untimely review and recording of the private offering was violative of FINRA Rules 2010, 3110 and National Association of Securities Dealers (NASD) Rule 3040.
The AWC additionally revealed that from December 2, 2013 to June 11, 2015, more than four hundred of the firm’s associated persons established and transmitted consolidated reports to customers. However, the firm through this period lacked any procedures aimed at supervising those reports. Prior to that point, FINRA issued Regulatory Notice 10-19, reminding brokerage firms about how the lack of adequate supervision of consolidated reports could result in the communication of misleading, confusing or inaccurate details to customers, as well as the use of those reports to further fraudulent objectives.
The firm reportedly failed to conduct a review of reports that its registered representatives manually crafted, and failed to examine the underlying documentation referencing the assets customers held away from the firm. Evidently, the firm did not establish written supervisory procedures pertaining to consolidated reports until FINRA’s 2015 examination of the firm. FINRA found that the firm’s supervisory failure in this regard was violative of FINRA Rules 2010, 3110 and NASD Rule 3010.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
