Titan Securities a brokerage firm headquartered in Addison Texas, and Brad Curtis Brooks (the firm’s Chief Executive Officer and President) and Richard Wayne Demetriou (the firm’s registered representative) have been fined by Financial Industry Regulatory Authority (FINRA) according to an Extended Hearing Panel Decision containing findings that (1) misleading or false representations had been made by Demetriou concerning investments placed in customer accounts (2) misleading investment summaries had been sent by Demetriou to investors which precluded them from adequately evaluating investments (3) the firm and Brooks neglected to supervise the firm’s preservation of investment related documentation (4) Demetriou utilized unapproved correspondence channels to facilitate investment discussions and (5) the firm illegally distributed investment funds before a minimum offering was accumulated. Department of Enforcement v. Titan Securities et al. Disciplinary Proceeding No. 2013035345701 (Mar. 5, 2019).
According to the Decision, while Demetriou was registered with Titan Securities, he maintained an involvement with a company affiliated with RBC Acquisitions, LLC called RBCP Preferred, LLC. Supposedly, a bank loan for millions of dollars had been requested by RBC Acquisitions so that it could finance a Mississippi-based real estate project, Riverbend. As a result, Demetriou reportedly contacted at least thirty-six customers concerning the RBCP offering. Supposedly, customers were led to believe that investing in RBCP would enable investors to make up for losses pertaining to other underperforming real estate limited partnership investments held in investors’ portfolios. Apparently; however, Demetriou lacked an adequate foundation to conclude that his representations were legitimate. Consequently, the Extended Hearing Panel found Demetriou’s conduct violative of FINRA Rule 2010.
The Decision also revealed that customers of Demetriou were provided sales literature and financial statements pertaining to RBCP that was misleading. FINRA found that the investors were not provided an adequate basis to consider RBCP as an investment given the inaccuracies in Demetriou’s communications. Evidently, investment summaries were provided to thirty-four customers that conveyed Demetriou’s predictions concerning RBCP investment values. Particularly, investors were advised by Demetriou that the investments were valuable and profitable despite the fact that the investments contained no value, were illiquid, and did not generate returns. The Extended Hearing Panel found Demetriou’s conduct in this regard to be violative of FINRA Rules 2010 as well as National Association of Securities Dealers Rule 2210.
Moreover, the Decision stated that the firm and Brooks neglected to create and implement reasonable supervision systems concerning the monitoring and retention of the firm’s investment-related e-mails. Supposedly, the firm also failed to enforce restrictions against brokers utilizing personal accounts to contact investors about investments. Consequently, the Extended Hearing Panel found the firm’s conduct violative of FINRA Rules 2010 and 4511 as well as NASD Rules 3110 and 3010.
Additionally, the Decision revealed that the firm and Brooks made misleading statements to customers within the private placement memorandum for Evolution Partners, II, which was another securities offering facilitated through the firm. The Decision stated that investors were told that the minimum offering amount for Evolution Partners, II would not include the amount contributed by the general partner or the general partner’s affiliates. Evidently, investors contributed funds that were released prior to the minimum offering amount having been procured. As a result, the Extended Hearing Panel Found the firm’s activities violative of Securities Exchange Act of 1934 Section 15(c), SEC Rule 15c2-4 and FINRA Rule 2010.
Richard Wayne Demetriou, who was fined $40,000.00 and suspended for one year from associating with a FINRA member in any capacity, has been identified in two customer initiated investment related disputes pertaining to allegations of his violative conduct during the time that he was associated with Private Consulting Group and Wealth Advisors. Specifically, a customer initiated investment related civil action brought in the United States District Court for the Eastern District of Kentucky that involved Demetriou’s activities was settled for $50,000.00 in damages supported by accusations of Demetriou’s unlawful actions in referring customers to ClassicStar, LLC. Civil Action No. 5:07CV-419-JMH. Then, a customer initiated investment related arbitration claim concerning Demetriou’s conduct was resolved for $120,000.00 in damages founded on allegations that Demetriou effected transactions in the customer’s account that were not suitable for the customer. FINRA Arbitration No. 14-01386 (Dec. 9, 2015).
Moreover, FINRA Public Disclosure reveals that Brad Curtis Brooks, who was fined $50,000.00 jointly with Titan Securities, has been identified in six customer initiated investment related disputes. For example, a customer filed an investment related arbitration claim concerning Brooks’ conduct in which the customer requested $300,000.00 in damages based upon allegations that Brooks failed to supervise the customer’s over-the-counter equities transactions. FINRA Arbitration No. 17-02747 (Oct. 27, 2017). Then, a customer initiated investment related arbitration claim regarding Brooks’ activities was settled for $9,850.00 in damages supported by accusations that Brooks neglected to supervise the customer’s direct participation program or limited partnership interest transactions. FINRA Arbitration No. 18-02577 (Oct. 10, 2018).
