Nicholas H. Shermeta, of Minneapolis, Minnesota, a stockbroker formerly registered with Northland Securities, Inc., has been permanently barred by the Securities and Exchange Commission (SEC) from working as an investment adviser or broker, or associating with any firm which provides investment advice or sells securities to the public, according to an Order Instituting Administrative And Cease-and-Desist Proceedings containing findings that Shermeta sold stock in a private placement outside the auspices of his registered firm. In the Matter of Nicholas H. Shermeta et al., File No. 3-17652 (Oct. 31, 2016).
According to the Order, in 2011, equity securities in Dakota Plains, a private placement, were sold by Shermeta in his capacity of unregistered broker-dealer, wherein Shermeta failed to apprise his firm and obtain approval to engage in the transactions. Apparently, investors had been actively solicited by Shermeta for investment in Dakota Plains, in which some of the investors were customers of Northland Securities, Inc. and Feltl & Company – both of which were firms Shermeta was associated with during the course of his actions.
The Order stated that a consulting agreement was put into effect by Shermeta through his limited liability company, Napa Properties. Evidently, Napa Properties was paid a commission which totalled $75,000.00 as a result of the sales of Dakota Plains stock which Shermeta effected. Yet, the consulting agreement, sales of stock, and commissions which Shermeta generated were not made known to Northland Securities, Inc. and Feltl & Company.
Consequently, the SEC found that Napa Properties and Shermeta’s conduct, which consisted of an unregistered brokerage firm effecting sales of securities, was willfully violative of Securities Exchange Act of 1934 Section 15(a)(1). In addition to Shermeta’s permanent bar, he and Napa Properties were jointly assessed a $50,000.00 civil penalty, and disgorged of the $75,000.00 commission.
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