Trustfirst Inc., a brokerage firm headquartered in Knoxville, Tennessee, has been censured and fined $15,000.00 by Financial Industry Regulatory Authority (FINRA) for providing customers with misleading investment information in reference to unregistered securities offerings. Letter of Acceptance, Waiver and Consent, No. 2014039420301 (June 28, 2017).
According to the AWC, offering documents had been submitted by Trustfirst to investors from January of 2013 to May of 2014, during which time the firm had been the underwriter and marketer of the securities to the firm’s customer base. The AWC stated that the firm drafted and prepared the Regulation D investment offering documents for customers, which consisted of escrow arrangements, subscription agreements, and the private placement memorandums.
Apparently, documents sent to investors contained language that FINRA deemed confusing and inaccurate. Evidently, the documents that the firm prepared did not specify, in any consistent manner, the range of contributions customers could make, whether the offers were contingent, and when the contingencies would end. In consideration of the unreliable statements made by the firm in that regard, FINRA concluded that there was no adequate basis by which customers could evaluate the offering and decide whether to invest.
Moreover, the AWC stated that a presentation was made to investors by Trustfirst that failed to account for risks that investors would be exposed to. The presentation reportedly conveyed investment return projections without adequately explaining the basis of the projected returns. Further, the firm reportedly failed to specify that the investment returns would not be guaranteed. Consequently, FINRA found that the firm’s conduct was violative of FINRA Rule 2210.
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