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 a period of great popularity. Issues that have been brought to the attention of FINRA include:
– Potential misrepresentations made by brokers regarding the sale of PPMs
– Due Diligence issues, including conflicts of interest over the authorship of due diligence reports
– Whether or not the PPM was suitable for many of the clients holding them
These and other issues are currently being examined by FINRA in connection with multiple PPM offerings.