The Financial Industry Regulatory Authority (FINRA) announced today that it has expelled Provident Asset Management, LLC, a Dallas based broker-dealer. The expulsion stems from a series of fraudulent private placement offerings marketed through an affiliate, Provident Royalties, LLC. Some have called the offering a Ponzi scheme, a massive one at that, involving thousands of investors.
Provident Asset Management was found to have misrepresented how the funds raised through the offering would be used. Despite assurances that capital raised would be used in the exploration and acquisition of real estate, oil and gas leases, and gaining mineral rights, investor funds were in actuality commingled and used by an affiliated issuer to pay off older investors.
The scheme operated for almost three years through 23 series of offerings sold via a network of over 50 retail broker-dealers. Through these offerings and this network of broker-dealers, over $480 million was raised, involving some 7,700 individual investments made by thousands of investors around the country.
Though the move announced by FINRA today will be welcomed by many, it does little to amend the damage done to defrauded investors. Many have turned to FINRA arbitration as a means to recoup their investment loss.