Securities Lawyers Blog
A FINRA disciplinary action against a brokerage firm resolves the regulator’s case, not the customers’ losses. Investors who held accounts at Carolina Financial Securities, LLC during the periods covered by the actions below may have claims of their own. The securities arbitration attorneys at Gana Weinstein LLP represent investors in FINRA arbitration against brokerage firms and can review your accounts, free of charge, to tell you whether the conduct FINRA described affected you.
Carolina Financial Securities is a broker-dealer that operates as an investment bank and placement agent, arranging private placements of securities. Founded in North Carolina in 1996, the firm is headquartered in Brevard, North Carolina, and is affiliated with Carofin.
Carolina Financial Securities, LLC – By the Numbers:
- CRD #: 41970
- Regulatory Events: 5
- Broker Employees: 9
Carolina Financial Securities, LLC – In the News:
FINRA v. Carolina Financial Securities, LLC (Case #2021072848301) – In 2021, Carolina Financial Securities participated as a placement agent in a contingency offering. In the offering, the firm failed to promptly return customer funds when the minimum contingency was lowered, a material change in the terms of the offering, in willful violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-9 promulgated thereunder, and in violation of FINRA Rule 2010. During this time, Carolina Financial Securities’ supervisory system, including written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with Exchange Act Rule 10b-9, in violation of FINRA Rules 3110 and 2010.
FINRA v. Carolina Financial Securities, LLC (Case #2014040295201) – This case arose from the sale of notes (“IMGF Notes”) by Carolina Financial Securities, LLC (“Carolina” or “Firm”) to accredited investors in February 2014 (“IMGF Offering”). The IMGF Notes were issued by a special purpose entity, International Manufacturing Group Funding, LLC (“IMGF”), for the stated purpose of IMGF’s lending money to International Manufacturing Group, Inc. (“IMG”), a medical and dental supply company, to finance certain costs related to setting up a facility to manufacture medical gloves and other supplies. The offering materials prepared and circulated by Carolina (“IMGF Offering Materials”) described the IMGF Notes as backed by substantially all of the assets of IMG and guaranteed by Deepal Wannakuwatte (“Wannakuwatte”), IMG’s chief executive officer (“CEO”) and owner. On Friday, February 21, 2014, while Carolina was still selling the IMGF Notes, the Federal Bureau of Investigation arrested Wannakuwatte. The FBI suspected that Wannakuwatte was operating a Ponzi scheme. The following Monday, Carolina informed FINRA of the IMGF Offering and Wannakuwatte’s arrest. The subsequent investigation resulted in the filing of the Complaint against Respondents Carolina and Bruce Roberts, Carolina’s CEO and chief compliance officer (“CCO”). The Complaint set forth three causes of action that were based on alleged material misrepresentations and omissions in the IMGF Offering Materials. The Complaint charged that Respondents violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010 by knowingly or recklessly making material misrepresentations and omissions in the IMGF Offering Materials in that they allegedly failed to respond adequately to red flags that would alert a prudent person to conduct further inquiry. In the alternative, the Complaint charged that Respondents acted in contravention of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and thereby violated FINRA Rule 2010 by negligently making the material misrepresentations and omissions in the IMGF Offering Materials. The Complaint also charged that Respondents violated FINRA Rules 2210(d)(1) and 2010 in that the IMGF Offering Materials contained material false statements.
Gana Weinstein LLP has successfully handled hundreds of investment disputes involving breach of fiduciary duty, negligent supervision, and unsuitable investment recommendations. Our FINRA attorneys offer free consultations to investors with losses at Carolina Financial Securities, LLC and other brokerage firms.