Richard Albert Seefried of Centennial Colorado a stockbroker formerly employed by Spencer Edwards Inc. has been fined $10,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made unsuitable investment recommendations to customers concerning convertible notes. Letter of Acceptance Waiver and Consent No. 2014041862703 (Dec. 4, 2017).
According to the AWC, the issuer of convertible notes, DOM, requested financing in 2013 to create a Washington, DC based digital signage advertising network. Spencer Edwards had apparently been selected by the issuer to conduct a Regulation D private placement offering. DOM reportedly sought $1,000,000.00 from investors through the issuance of convertible promissory notes.
According to the AWC, DOM was supposed to be reviewed and investigated by Seefried in anticipation of the 2013 offering. Yet, the AWC reported that Seefried’s due diligence failed to investigate DOM’s representations and failed to further examine discrepancies located in DOM’s materials concerning the locations where signs would be located as well as lease arrangements pertaining to the signs.
The AWC revealed that DOM’s business model depended on signage space to be leased in high traffic areas as well as DOM securing certain locations. Seefried reportedly neglected to ensure that DOM secured sites were signs would be located, and failed to speak with the counterparties to lease arrangements concerning the arrangements that DOM made. Moreover, Seefried failed to check on the background of the DOM principals; he failed to identify that one of those principals had been subject of litigation containing securities fraud allegations and that there were liens which could negatively affect DOM’s business affairs and assets.
The AWC stated that $200,000.00 of DOM notes had been recommended and sold to investors by Seefried in July and August 2014, wherein Seefried procured more than $13,000.00 in compensation as a result of his sales efforts. FINRA determined that Seefried made those recommendations to the customers despite lacking an adequate foundation to conclude that the notes were appropriate for them or any other investor for that matter. Consequently, FINRA found that Seefried’s conduct was violative of FINRA Rules 2010 and 2111(a).
This is not the first time that Seefried has had sanctions levied against him by a securities regulator. Particularly, Seefried has been suspended from associating with any FINRA member in any capacity according to a Decision & Order of Offer of Settlement containing findings that Seefried traded in a customer’s account without authorization. Department of Enforcement v. Richard A. Seefried Disciplinary Proceeding No. 2007008443101 (Mar. 11, 2010).
According to that Order, Seefried reportedly placed trades in a customer’s account on a discretionary basis; he never procured the customer’s approval for the account to be treated as discretionary. The Order additionally stated that Seefried falsified information about his exercise of discretion on a compliance-based questionnaire that the firm administered to him. The Order further revealed that Seefried made recommendations to customers regarding low-priced stocks that were not suitable for those customers. FINRA’s Office of Hearing Officers concluded that Seefried’s conduct was violative of National Association of Securities Dealers (NASD) Conduct Rules 2510(b), 2310(a) and 2110.
Additionally, FINRA Public Disclosure reveals that Seefried has been identified in two customer initiated investment related disputes pertaining to accusations of his violative conduct during the period that he was registered with Paulson Investment Company, Inc. Particularly, on June 29, 2006, a customer initiated investment related complaint involving Seefried’s conduct was settled for $9,500.00 in damages supported by allegations that the customer received erroneous assurances regarding the prospects of a company whose stock had been purchased by the customer. The customer further alleged that Seefried traded in the customer’s accounts without procuring the customer’s consent.
On April 17, 2007, another customer initiated investment related complaint concerning Seefried’s activities was resolved for $175,000.00 in damages based upon accusations that misleading information was provided to the customer, misrepresentations had been made concerning investments and the customer’s over-the-counter equities portfolio had been excessively traded and churned.
Seefried’s registration with Spencer Edwards Inc. was terminated as of August 24, 2017.
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