Leigh Garber, of New Woodstock, New York, president of Ridgeway & Conger, Inc., was fined $15,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity per an Office of Hearing Officers’ Order Accepting Offer of Settlement containing findings that he failed to supervise mark-ups and unregistered securities sales. Department of Enforcement vs. Garber, No. 2010022046101(Jan. 12, 2016).
According to the Order, from June through August 2010, stockbrokers Kenley and Philip Brisard, as well as the firm, were alleged to have effected sales of securities that were unregistered and which were comprised of interest-only strips from loans which had been issued via United States Small Business Association. The Order stated that these unregistered securities were only meant to be purchased by qualified institutional buyers.
Kenley and Brisard reportedly sold such unregistered securities that contained undisclosed markups which ranged from fourteen to thirty-three percent, and marketed the products by way of generalized emails that were solicited to investors that had contained fraudulent misrepresentations of both the products and the role that each respondent had concerning its development.
Prior to the Order, a Complaint was filed by FINRA which alleged that Kenley and Philip Brisard violated Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, along with FINRA Rules 2010 and 2020 as a result of inducing five of the firm’s customers to purchase the unregistered security.
Garber was reportedly the firm’s president and chief executive officer. The Order stated that Garber’s capacity with the firm was that of designated supervisor of markups and private placements. Garber reportedly signed the internal trade tickets along with approving excessive markups. Garber also was found to have approved the firm’s sales of the unregistered securities notwithstanding such unregistered securities violated Section 5 of the Securities Act.
Three months prior to the aforementioned sale of the unregistered securities to the firm’s individual investors, Garber represented to the placement agent that the qualified institutional buyers, not individual investors, would be sold the Rule 144A security. Yet, Garber was found by FINRA to have provided written approval for the individual customers to be sold the security.
FINRA found that Garber had violated FINRA Rule 2010 along with NASD Rules 3010(a) and (b) via the failure to establish and uphold the necessary level of supervisory systems and protocol pertaining to 144A Securities, in addition to Section 5 activities regarding interest-only unregistered security sales, and markups.
Public disclosure records reveal that Leigh Garber has been subject to two disclosure incidents. On August 1, 2005, Garber was sanctioned and fined $5,000 by the National Association of Securities Dealers (NASD) after consenting to findings that he violated NASD Membership and Registration Rules 1021, 1031, and NASD Conduct Rule 2110 in connection with permitting an individual to maintain securities licenses when not actively involved in the firm’s securities or investment banking business, while also permitting such individual to act as the firm’s finance and operations principal even though the individual had inactive registration status with NASD.
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