Finra goes after yet another B-D in private-placement crackdown

National Securities receives notice of imminent enforcement action; scrutiny likely stems from sale of Provident Royalties notes

Feb 15, 2011 @ 3:28 pm

By Bruce Kelly

National Securities Corp. is the latest broker-dealer to face disciplinary action from Finra over the sale of private placements gone bust.

According to National Securities' profile on Finra's BrokerCheck system, the firm received a Wells notice last month from the Financial Industry Regulatory Authority Inc. A Wells notice indicates that the regulator intends to bring an enforcement action against an individual or a firm.

National Securities reps sold investors about $3.7 million of notes issued by Provident Royalties LLC, according to the latter's bankruptcy court filings. The Regulation D offering from Provident involved a series of oil and gas private placements that the Securities and Exchange Commission in 2009 claimed were fraudulent,

Mark Roth, the firm's general counsel for National Holdings Corp., the parent of National Securities, did not return phone calls Tuesday seeking comment.

National Securities received the Wells notice regarding violations of product suitability rules, e-mail supervision rules, and standards of commercial honor and principles-of-trade rules, according to the BrokerCheck report. The product mentioned in the report was a “private placement.”

Finra officials have made broker-dealers' sale of private placements that failed during the market collapse their No. 1 enforcement priority this year.

In a meeting of brokerage executives this month in Phoenix, James Shorris, executive vice president and executive director of enforcement with Finra, said Reg D private placements and non-traded real estate investment trusts are listed as the first and second areas of focus for Finra, respectively.

Broker-dealers have begun to feel the pinch. Workman Securities Corp. this month reached an agreement with Finra to pay $700,000 for partial restitution to more than a dozen clients who had sued the firm over investments in Medical Capital Holdings Inc. and Provident Royalties. Like Provident, the SEC charged Medical Capital with fraud in 2009.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Dynasty's Penney: Top RIA trends for 2018

What's next for RIAs? Dynasty's Shirl Penney talks about the growing numbers of entrepreneurial advisers. Plus, what inspired his own entrepreneurship.

Latest news & opinion

Tax reform debate sparks fresh interest in donor-advised funds

Schwab reports new accounts up 50% from last year, assets up 33%.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

Senate committee approves tax plan but full passage not assured

Several Republican senators expressed reservations about the bill, and the GOP cannot afford too many defections.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print