by Howard Haykin

WHAT WENT DOWN.    It all began in September 2016, when the broker received an email from his friend and CEO of an energy company indicating that the company was seeking to raise $1.2 million in a private offering. Without notifying Ameriprise, the broker forwarded the correspondence (with attachments) to several high net worth clients. As it turned out, the correspondence was deficient, in that it failed to provide a fair and balanced discussion of the risks associated with the investment. For example, the attachments …

The broker continued to participate in the company’s offering. He scheduled and participated in meetings with his clients and the CEO friend; he exchanged emails with the CEO friend that referenced amounts his clients would invest; and he followed up with clients regarding their investments in the company. In December 2016, the broker personally invested $50,000 in the energy company, while 3 of his clients invested a total of $550,000.

INVESTOR TAKE AWAYS.    In an upcoming Financialish article, we look at ways that private securities transactions can escalate the risks to investors.  

[For further details on this case, click on … FINRA Case #2017056036301.]

[For further details on Private Securities Transactions of an Associated Person, click on … FINRA Rule 3280.]

[For further details on Communications with the Public – Content Standards, click on … FINRA Rule 2210(d).]