Paul T. Mannion, Jr. of Roswell, Georgia, a stockbroker registered with StreetCapital, Inc., was fined $10,000 and suspended for six months from association with any Financial Industry Regulatory Authority (FINRA) member firm in all capacities after consenting that he failed to disclose material information to potential investors. Letter of Acceptance, Waiver and Consent, No. 2011028722201 (Jan. 20, 2016).
According to the AWC, in December 2010 and March 2011, Mannion engaged in an effort to help drive in business for two companies by soliciting investors of the firm. Potential investors were sent two separate e-mails which omitted material information regarding investment opportunities in certain companies. After Mannion reportedly reviewed and approved the e-mails, he took part in their distribution to the prospective investors, with the aim being to raise money for such companies identified in the e-mails.
The AWC stated that StreetCapital and Mannion collectively caused the December 2010 e-mail to be distributed to one hundred seventy prospective customers. Mannion was tasked with the responsibility of reviewing and approving such e-mail prior to distribution.
The AWC indicated that Mannion and/or members of his family, as well as Mannion’s solely owned limited partnership, loaned funds to the company and held one of the issuer’s stock. Mannion reportedly played an active part in growth and development of the company. Further, Mannion reportedly had knowledge that the aforementioned company was at risk of defaulting on interest payments due on prior promissory notes that the company issued. All of this information, according to FINRA, was withheld from disclosure to the prospective investors.
Additionally, according to the AWC, a second e-mail in March 2011 was distributed to a minimum of eighteen investors, where Mannion took part in and authorized such distribution. Like the case with the first e-mail distribution, Mannion’s relationship with the issuer prompted his responsibility to review the contents of the e-mail prior to distribution. Mannion reportedly failed to disclose in the e-mail that his family and him were stakeholders.
FINRA concluded that Mannion either knew or should have known that the material information was omitted from the aforementioned e-mails. FINRA found that Mannion violated Rule 2010 as a result of his actions not being consistent with just and equitable principles of trade and high standards of commercial honor.
Public disclosure records reveal that Mannion has been subject to six disclosure incidents. On July 15, 1995, he was named in two customer disputes which settled for $30,000 and $68,000, where both disputes contained allegations of failure to supervise. Mannion was subject to another customer dispute on October 1, 1995, which settled for $27,000 after a customer alleged failure to supervise, manipulation, misrepresentation, and unauthorized trading.
On October 19, 2010, the United States Securities and Exchange Commission charged Mannion in Complaint with violating Securities Exchange Act of 1934 Section 10(b) and Rule 10b-5, along with Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Securities and Exchange Commission v. Paul T. Mannion, Jr., et al., Civil Action No. 1:10-CV-03374 (Oct. 19, 2010). According to the Complaint that the SEC filed, Mannion (at the time a hedge fund portfolio manager), in addition to the investment adviser entities that he was in control of, allegedly defrauded investors through overvaluing assets and engaging in misappropriation, and made material misrepresentation in connection with a private stock offering.
On October 3, 2014, the United States Securities and Exchange Commission issued a Cease and Desist Order against Mannion pursuant to Section 15(b) of the Securities Exchange Act of 1934, Section 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940, in connection with allegations that Mannion, in addition to another individual, took warrants that belonged to a fund, exercised the warrants, and ultimately deposited the funds into their brokerage accounts. On March 25, 2013, the District Court for the Northern District of Georgia found that Mannion, as well as the other individual, violated Section 206(2) of the Investment Advisers Act of 1940 by taking the fund’s warrants.
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