The president of Brookville Capital Partners was barred for fraud and the firm ordered to make full restitution to its customers after the Financial Industry Regulatory Authority found they had been defrauded in a private placement offering.
Among other recent actions taken by FINRA were the censure of Merrill Lynch and Merrill Lynch Professional Clearing Corp. and a fine for the two of more than $7 million on large option position reporting failures; the censure and fine of Clearview Correspondent Services for aggregation failures; and the censure and fine of Citigroup Global Markets for failure to deliver ETF prospectuses to customers.
Investment Firm Hid Client’s Criminal Record From Investors: FINRA
FINRA has barred Anthony Lodati, president of the wealth management firm and investment bank Brookville Capital Partners, from the securities industry. It has also fined the firm $500,000 for fraud and ordered it to make full restitution of more than $1 million to customers that the agency said were defrauded in connection with sales of a private placement offering.
According to FINRA, the private placement offering, called Wilshire Capital Partners Group LLC, was one through which investors were told they would have an indirect interest in pre-initial public offering shares of Fisker Automotive. The conduct took place from January 2011 to October 2011.
During the time Brookville solicited customers to invest in the offering, Lodati learned that Wilshire’s CEO and managing director, John Mattera, had a significant criminal and regulatory background. Instead of disclosing that, among other things, Mattera had been sanctioned by the SEC in 2010 for securities fraud and convicted of a felony in Florida in 2003, Lodati and Brookville purposely hid both Mattera’s background and his involvement with Wilshire, and continued to solicit its customers to invest.
Brookville sold more than $1 million worth of interests in Wilshire to 29 customers. Brookville received more than $104,000 in commissions for the sales.
Brookville and Lodati neither admitted nor denied the charges, but consented to the sanctions.
FINRA Censures, Fines Citigroup Global Markets on ETF Prospectus Failures
FINRA censured Citigroup Global Markets and fined the firm $3 million for failing to deliver prospectuses on certain ETFs to customers.
The firm neither admitted nor denied the findings that it failed to deliver prospectuses for approximately 255,000 customer purchases of approximately 160 ETFs during a three-month period for which the firm self-reported the failure. From 2009 through April 2011, it is estimated that the firm may have failed to deliver prospectuses for over 1.5 million purchases of ETFs by its customers.
The firm was also found to have failed to design and implement a supervisory system adequate to achieve compliance regarding ETF prospectus delivery. The firm’s decentralized supervisory system meant that, although the firm found some failures in 2009, it failed to identify deficiencies in its process and to realize the scope of the problem. As a result it failed to deal with the matter manually in a timely manner.
The firm did not appropriately respond to “red flags” about delivery failures. Although it found isolated failures in 2009, it wasn’t until 2010 that it realized how broad the issue was and found the deficiencies in its supervision. FINRA Censures, Fines Merrill Lynch Millions on Options Reporting Failures