Murray Sinclaire, of Cincinnati, Ohio, owner and former president and chief executive officer of Ross, Sinclaire & Associates, LLC, has been fined $35,000.00, stripped of his municipal securities principal licensure, and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member for six months in any capacity based upon his consent to findings that he made omissions to customers relating to municipal securities offerings, and failed to supervise the firm’s operations regarding investment disclosures to customers. Letter of Acceptance, Waiver and Consent, No. 2015043591702 (Sept. 25, 2017).
According to the AWC, from 1989 to June of 2016, Sinclaire was the firm’s chief executive officer, managing member and president. In those capacities, he was reportedly responsible for making sure that the policies and procedures of his firm were compliant with Municipal Securities Rulemaking Board rules. He also purportedly failed to abide by his own firm’s procedures. Apparently, the written procedures called for material descriptions and facts about securities transactions to be disclosed by the firm for MSRB Rule G-17 compliance. The AWC additionally stated that private offerings and municipal securities were supposed to be supervised by Sinclaire in his role as direct supervisor of the firms’ brokers. FINRA found that the duty to disclose the investment information to customers rested in Sinclaire, yet he made serious omissions to customers in regard to offerings of municipal securities.
In particular, Sinclaire facilitated company ARI’s 2015 private placement offering, where ARI was a company that Sinclaire had a personal stake in. Apparently, ARI created a private placement memorandum that was processed through the supervisory staff at Ross, Sinclaire & Associates, LLC supervised, and ultimately disseminated to customers with omissions about: who managed and owned Ross, Sinclaire & Associates, LLC; Sinclaire’s status as a beneficiary of the ARI offering; ARI’s poor financial shape; a possible sale involving ARI’s assets; and ARI’s lease arrangements with a county in Kentucky.
FINRA found that Sinclaire, as ARI’s owner, had personal knowledge about the conflicts of interests regarding supervisory responsibilities that he had in Ross, Sinclaire & Associates, LLC – the company that facilitated the offering. The AWC stated that Sinclaire failed to disclose other troubling financial information about ARI in connection with the private placement offering facilitated through Ross, Sinclaire & Associates, LLC. His conduct was found by FINRA to be violative of MSRB Rules G-17 and G-27.
Sinclaire is also the subject of a $50,000.00 fine, prohibition as well as cease and desist sanctions imposed by the Securities and Exchange Commission according to an Order Instituting Administrative and Cease-and-Desist Proceedings and Offer of Settlement containing findings that Sinclaire engaged in a fraudulent scheme in which the firm’s advisory customers were overcharged commissions. In the Matter of Ross, Sinclaire & Associates, LLC, et al., File No. 3-17315.
According to the Order, between January of 2007 and December of 2012, a registered investment adviser and Ross, Sinclaire & Associates, LLC, concocted a scheme to defraud investment advisory customers. Apparently, those customers were exposed to excessive commissions by Ross, Sinclaire & Associates, LLC. The investment advisor president was reportedly involved in arranging a set price for the firm to charge transaction fees, including markdowns, markups and commissions. Particularly, Sinclaire authorized the investment advisor president to determine the fees that customers paid on transactions. Sinclaire’s conduct was found by SEC to be violative of aiding and abetting Securities Exchange Act Section 15(b)(7) violations as well as the violation of SEC Rule 15b7-1.
FINRA Public Disclosure reveals that on May 5, 2017, a customer filed an investment related arbitration claim involving Sinclaire’s conduct, in which the customer sought $455,000.00 in damages supported by allegations that Sinclaire failed to supervise a registered representative who effected improper municipal debt transactions in the customer’s investment account.
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