Meyers Associates, L.P. (now known as Windsor Street Capital, L.P.) has been censured and fined $700,000.00 and its president, Bruce Meyers, fined $100,000.00 and barred in a supervisory capacity by Financial Industry Regulatory Authority (FINRA) according to a National Adjudicatory Council Decision confirming that Meyers, inter alia, had disseminated misleading and unbalanced investment related communications to prospective investors. In the Matter of Department of Enforcement v. Meyers Associates, L.P. and Bruce Meyers, No. 2010020954501 (Jan. 4, 2018).
According to the Decision, in 2006, Meyers and LH created a biotechnology company, SignPath Pharma, Inc., to build a formulation of a turmeric plant, curcumin, so that it could be utilized for medicinal purposes. Apparently, investment banking services had been provided by Meyers Associates to SignPath, and Meyers served as SignPath’s only placement agent for offerings of SignPath’s securities. Evidently, as much as $6,000,000.00 had been raised within a private offering of SignPath securities by Meyers in May of 2008.
The Decision revealed that between January of 2011 and June of 2011, at least $350,000.00 in additional funds had been raised by Meyers for SignPath, during which time over one-thousand e-mails that been sent by Meyers to investors, hedge funds and venture capitalists, where he encouraged investors to place their funds in biotechnology companies. Meyers typically represented himself as the principal of SignPath, and encouraged recipients of his e-mails to take advantage of his opportunity and help SignPath generate capital in its developmental stage. FINRA found that Meyers’ communications; however, came off as misleading.
Specifically, FINRA stated that misleading and unwarranted claims had been made by Meyers about the future of SignPath, where Meyers reportedly claimed that the opportunity to acquire an oral incretin-mimetic, Dutogliption, was somehow unique and would enable the firm to propel itself within months into a fourth clinical phase. Evidently, Meyers failed to inform prospective investors that at least $3,000,000.00 in funds would need to be raised to have any chance at buying Dutogliptin and that it would cost $12,000,000.00 in additional funds to pursue clinical trials.
FINRA noted that Meyers would tout prospective financial returns in an unwarranted fashion, wherein he failed to establish the parameters by which SignPath’s future returns within two years would be made possible. Meyers also reportedly failed to state that it lacked expertise with product distribution, sales, marketing and even manufacturing products. Moreover, Meyers failed to disclose to prospective investors that SignPath incurred substantial losses and was not expecting in the near future to have sufficient revenues generated to back the company’s launch of a product. Meyers additionally failed to inform prospective customers that their investment in SignPath was risky and illiquid.
The Decision also revealed that Meyers’ position at Meyers Associates was not disclosed, nor was the relationship between SignPath and Meyers Associates, including the fact that the firm and Meyers held at least sixty percent of the common stock in SignPath. National Adjudicatory Council held that the content standards were violated by Meyers and Meyers Associates; conduct violative of FINRA Rule 2010 and NASD Rule 2210.
The Decision further noted that Meyers and the firm neglected to adequately supervise the records and books of the firm as well as electronic correspondence distributed by the firm’s staff; conduct violative of FINRA Rule 2010 and NASD Rules 2110 and 3010. Moreover, Meyers Associates reportedly failed to notify FINRA that it had been subject of forty-nine customer initiated investment related complaints; conduct violative of FINRA Rule 2010 and NASD Rules 2110 and 3070.
The National Adjudicatory Council not only affirmed the Extended Hearing Panel’s findings concerning Meyers’ misleading communications, but found that the improper conduct was deemed reckless and egregious, causing the National Adjudicatory Council to increase the Meyers Associates’ fine by $200,000.00 and Meyers’ fine by $25,000.00.
FINRA Public Disclosure reveals that Meyers has been identified in nine customer initiated investment related disputes containing allegations of his misconduct during the time he was employed with Meyers Associates, L.P. Specifically, on January 5, 2015, a customer filed an investment related written complaint involving Meyers’ conduct, in which the customer sought $5,000.00 in damages based upon accusations of excessive commissions having been charged to the customer on over-the-counter equities.
Additionally, a customer filed an investment related arbitration claim involving Meyers’ conduct, where the customer requested $125,424.00 in damages supported by allegations of misrepresentation and suitability relating to the customer’s equity investments. FINRA Arbitration No. 15-01147 (May 26, 2015). Then, a customer filed an investment related written complaint involving Meyers’ conduct, in which the customer sought $545,000.00 in damages founded on accusations that private placement investments were not suitable for the customer. FINRA Arbitration No. 16-00454 (Apr. 7, 2016).
Subsequently, a customer filed an investment related arbitration claim regarding Meyers’ activities, where the customer requested $383,000.00 in damages based upon allegations that between February of 2016 and November of 2016, Meyers effected unauthorized and unsuitable trades in the customer’s account, and churned the customer’s investment portfolio. FINRA Arbitration No. 17-00884 (Apr. 18, 2017).
Meyers’ registration with Meyers Associates, L.P. has been terminated as of June 8, 2016.
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