Blog

FINRA Elevates Focus on the Failure to Conduct Proper Due Diligence on Private Placements

December 20, 2018

On December 7, 2018, the Financial Industry Regulatory Authority (“FINRA”) issued a comprehensive report (“Report on FINRA Examination Findings”) which “focuses on selected observations from recent examinations that FINRA considers worth highlighting because of their potential significance, frequency, and impact on investors and the markets.” Among the issues discussed in this report were significant concerns […]

SEC issues alert on Investment Adviser due diligence of alternative investments

January 29, 2014

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) today issued a Risk Alert on the due diligence processes that investment advisers use when they recommend or place clients’ assets in alternative investments such as hedge funds, private equity funds, or funds of private funds. The alert describes current industry trends […]

Due Diligence on Medical Capital Notes at Issue in Massachusetts Case Against Securities America

January 28, 2010

In the Commonwealth of Massachusetts v. Securities America Inc, the United States is seeing the first instance of a state regulator bringing an enforcement case against a company over private placement deals. The allegations contained in the initial complaint are partially based on the claim that Securities America failed to follow through with proper due […]

FINRA – Private Placement Enforcement Cases to Come

December 14, 2009

James Shorris, executive director of enforcement at the Financial Industry Regulatory Authority (FINRA) has been quoted by Investment News as saying that enforcement cases on multiple private placement deals can be expected to begin by next year. Private placement memorandum (PPM) deals, also known as Reg D offerings, have come under increased scrutiny after enjoying […]

Due Diligence Lacking in Private Placement Deals

September 25, 2009

Recent failures of private placement deals, including notes issued by Medical Capital Holdings, has brought to light the issue of due diligence performed by broker-dealers. The issue that has been raised is that there is little to no pre-screening of private placement investment products by a regulatory body. This lack of regulatory oversight has exposed […]