The Financial Industry Regulatory Authority Inc. this week censured and fined a Los Angeles-based investment bank and broker-dealer, WestPark Capital Inc., $250,000 after it made material misrepresentations to clients in documents when selling promissory notes issued by its parent company.
WestPark is a small firm with 60 registered reps in eight branch offices, according to the Finra settlement, which was issued Monday. The firm is owned by WestPark Capital Financial Services, and the promissory notes in question were sold from January 2012 to January 2018 to 21 customers and raised $3.9 million, according to the regulator.
WestPark Capital agreed to the settlement without admitting or denying Finra's findings. Finra also fined the firm's CEO, Richard Rappaport, $30,000, and suspended him four months from the securities industry in the matter.
A WestPark Capital spokesperson did not return calls Wednesday morning to comment.
Small broker-dealers from time to time sell stock or try to raise money from sales of private placements or promissory notes. Regulators may keep a close eye on such dealings due to the opaque and closed nature of such transactions.
The firm's information in the sale of the notes was faulty, according to Finra. WestPark provided investors with offering documents for the notes, which were approved by Rappaport, that contained material misrepresentations and omitted material facts, according to Finra.
For example, the offering documents stated that the parent company had a $1 million line of credit with a bank and that it was not in default on any "agreement or instrument material to its business," according to Finra.
However, the offering documents failed to disclose that WestPark Capital Financial Services had defaulted on the line of credit and had defaulted on successive forbearance agreements with the bank, or that the bank had sued the firm and Rappaport.
The offering documents for the notes also failed to disclose the parent company had net operating losses each year from 2012 through 2016, according to Finra.
WestPark and Rappaport also failed to reasonably supervise the registered reps soliciting investments in the private notes, according to Finra, and also more recently to comply with Finra's Taping Rule, which requires firms to record and review conversations between reps and clients.
Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.
The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.
The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.
Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.
"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
