The Financial Industry Regulatory Authority Inc. has sued the owner of a small broker-dealer that is home to registered representatives with a concentration of dings and marks, called disclosure events in the industry, on their employment histories.
Bruce Meyers, who is owner and chief executive of Meyers Associates of New York, was sued this month by Finra for alleged improper marketing of an unregistered securities offering of a pharmaceutical company. Mr. Meyers and another firm executive were majority owners of the company, SignPath Pharma Inc., which, from its inception, has had no revenue, according to the Finra complaint.
“In marketing the Series A offering, Meyers [Associates], acting through [Mr. Meyers], also made exaggerated and unbalanced claims and improper predictions of price performance,” according to the Finra complaint. “In addition they omitted material facts, including full disclosure of Mr. Meyer's,” the firm's and others' ownership in SignPath Pharma, the complaint alleges.
Bruce Meyers did not return calls on Monday and Wednesday seeking comment. He has eleven disclosure events on his BrokerCheck report, with two pending, including the October Finra action.
About 12% of registered securities professionals have some type of disclosure event on their records, according to Finra. At Meyers Associates, the percentage of reps with disclosure events is an astounding five times the industry average.
InvestmentNews in March drew attention to Mr. Meyers and his firm after a review of the BrokerCheck profiles of its 75 registered reps showed that 47 Meyers Associates reps have some type of disclosure event on their BrokerCheck records. That means that close to 63% of the firm's producers have marked-up BrokerCheck histories. Of those who have disclosure events, the average was 4.5 per rep.
On its website, SignPath Pharma states that its financing sources include “private investors” as well as the Michael J. Fox Foundation for Parkinson's Research. A spokeswoman for the foundation, Maggie McGuire, confirmed that in 2009 the foundation funded one SignPath project. She did not state the amount of funding.
The unsolicited offering occurred in the first half of 2011, according to the Finra complaint. Meyers Associates raised almost $300,000 by selling Series A units of SignPath to investors.
According to the Finra complaint, Mr. Meyers and the firm marketed unregistered securities of SignPath Pharma Inc. to more than 1,000 recipients of boilerplate e-mails without first establishing a substantive relationship with those clients. It is against industry regulations for a broker to make a general solicitation of a private placement or limited partnership; brokers are allowed to sell those securities to sophisticated investors with whom they have a longstanding relationship.
The Finra complaint also alleges that Mr. Meyers and another senior executive caused the firm to make payments of more than $200,000 for their personal and business expenses, without booking any of the payments as compensation, thus causing the firm to maintain and create inaccurate books and records.