New Hampshire securities regulators in December said they were looking to penalize Herbert J. Sims & Co. Inc. a total of $480,000 for a variety of alleged failures of due diligence, record keeping, and other compliance issue in the sale of high-risk Regulation D private placements to residents of the state.
According to the proposed cease and desist order, Herbert J. Sims & Co., which is based in Fairfield, Conn. with a specialty in tax-free bond underwriting, would also be barred from any further sales of securities in New Hampshire.
If the proposed order were to take effect as written, Herbert J. Sims & Co. was fined $380,000 for violation of state securities rules, according to the order, and will pay $100,000 in costs to state for the investigation.
However, New Hampshire’s order is a step in negotiating a potential fine with the firm.
“We have filed an answer to their order which stays the matter pending a hearing, meaning we have requested a hearing,” said Tom Byrne, associate general counsel at the firm.
The proposed enforcement action by the New Hampshire Bureau of Securities Regulation is dated Dec. 26 and signed by Barry J. Glennon, the bureau’s director.
According to a report in 2022 by SLCG Consulting, at least 10 of the 45 Herbert J. Sims offerings have defaulted on interest and/or principal payments.
According to the state’s Bureau of Securities Regulation, Herbert J. Sims & Co. claims to specialize in underwriting debt and equity securities for more than 70 years concentrating on financing for the senior living industry.
The firm also claims to be a full-service investment banking firm that specializes in structuring and underwriting financing for long term senior care facilities, and has placed over $10 billion in senior living financing, according to the bureau.
Herbert J. Sims & Co. allegedly failed to fully respond to the bureau's requests for information and also allegedly failed to perform required due diligence for the private placement in a number of ways, according to the order.
From about 2006 to the present, Herbert J. Sims & Co. filed 18 Reg D private placements to sell in New Hampshire. But a decade later, the firm’s investments started to default.
Starting in 2016, the private placement offerings started to experience defaults, including one deal called Hawkeye Village Financing I, which was launched in 2016.
And Herbert J. Sims & Co. “failed to disclose the defaults and failed to disclose their past performance with these offerings generally,” the New Hampshire order stated.
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