Jeffrey B. Risinger of Carmel, Indiana, a registered representative with PIN Financial, LLC, was barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he had failed to cooperate with a FINRA investigation into allegations of Risinger’s participation in a Ponzi scheme. Letter of Acceptance, Waiver and Consent, No. 2015045682501 (Nov. 23, 2015). PIN Financial LLC, on May 27, 2015, permitted Risinger to resign amid an SEC action brought against Risinger and others pertaining to the Ponzi scheme.
On April 22, 2015, the Securities and Exchange Commission filed a complaint against Veros Partners, Inc., its president, Matthew D. Haab, and two associates, attorney Jeffrey B. Risinger and Tobin J. Senefeld, for engaging in two fraudulent farm loan offerings, in which they made Ponzi scheme payments to investors in other loan offerings and paid themselves hundreds of thousands of dollars in undisclosed fees. United States Securities and Exchange Commission v. Veros Partners, Inc. et al., Case No. 1:15-cv-659-JMS-MJD (S.D. Ind.). According to the complaint, the defendants fraudulently raised at least $15,000,000 from at least eighty investors, most of whom were Veros’ clients.
The SEC indicated that the investors were informed that their funds would be used to make short-term operating loans to farmers, but where most of the funds were used to cover the farmers’ unpaid debt on loans associated with prior offerings. Risinger, among others, used money from the offerings to pay millions to investors in prior farm loan offerings and pay themselves over $800,000 in undisclosed success and interest rate spread fees. The SEC’s complaint charged the defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, Veros and Haab with violating Sections 206(1), 206(2) of the Investment Advisers Act, and Veros with violating 206(4) of the Investment advisers Act of 1940 and Rule 206(4)-2.
According to the AWC, on October 8, 2015, FINRA had requested, pursuant to Rule 8210, that Risinger provide on-the-record testimony on October 28, 2015, concerning the allegations of Risinger’s participation in a Ponzi scheme.
The AWC indicated that Risinger’s counsel informed FINRA staff on October 8, 2015, that Risinger acknowledged receipt of FINRA’s request for testimony, but indicated that Risinger would not be providing the testimony at any point. Consequently, FINRA found Risinger to have violated FINRA Rules 8210 and 2010, leading to his bar.
Section 10(b) of the Exchange Act makes it unlawful “to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
Four elements are necessary to show in finding a violation of Section 10(b) of the Exchange Act, Rule 10b-5: 1) misrepresentations and/or omissions were made; 2) misrepresentations and/or omissions were material; 3) representations and/or omissions were made with requisite intent (e.g. scienter), and 4) misrepresentations and/or omissions were made in connection with the purchase or sale of securities.
FINRA registered representatives like Risinger 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.
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