The Financial Industry Regulatory Authority (FINRA) has settled a dispute with vFinance investments, Inc. (vFinance) concerning several violations of the securities laws including selling private placements in violation of the securities laws, failure to supervise, failure to disclose that the firm had worked with a statutorily disqualified person, and failure to retain and review email communications.
vFinance has been a FINRA member since 1998 has approximately 8 branch offices and employs about 40 registered representatives. The recent settlement is not the first time vFinance has been investigated by regulators. According to CRD records, there have been a total of 16 SEC, state, and FINRA regulatory actions initiated against vFinance in the past ten years.
The recent FINRA allegations concern several alleged violations. First, FINRA alleged that vFinance violated Regulation M. Regulation M is intended to prevent manipulative practices in the course of a securities offering by persons with an interest in the outcome by preventing conduct that could artificially influence a security’s market. In this case, FINRA alleged that vFinance representatives solicited nearly $6 million from investors for the PERF Go-Green Holdings, Inc. (PGOG) private placement. During the offering period, vFinance placed the PGOG’s common stock on the firm’s restricted list in order to avoid any potential conflict. However, despite the PGOG being placed on the firm’s restricted list, 22 customers of two representatives have been accused of selling 255,300 shares of the common stock of PGOG when the issuer was on the firm’s restricted list.
Second, FINRA alleged that vFinance employees worked closely with an individual in the private placement offering who had been previously barred from association with any broker-dealer in 2002. Under FINRA Rule 4530 the firm was required to report the statutory disqualified person and their business activities to FINRA.
Finally, FINRA alleged that one representative involved in sales of PGOG used his personal email account to solicit purchases from investors. According to FINRA, only some of the representative’s personal emails were forwarded to the firm while others were not captured or retained by vFinance as required under the securities laws. By failing to retain communications, FINRA alleged that the firm did not put in place procedures reasonably designed to supervise its securities business and comply with the securities laws.
The attorneys at Gana LLP are experienced in investigating claims concerning the sale of private placements. Our consultations are free of charge and the firm is only compensated if you recover.