The Financial Industry Regulatory Authority (FINRA) has penalized a brokerage-dealer company regarding its private offerings management. As per a confirmation letter and approval published by the regulatory agency, National Securities Corp (NSC) supposedly sold buyers a pre-initial public offering in a privately owned firm recognized as “Company A” in two different offerings between December 2017 and January 2018. The Pre-IPO was managed through NSC’s affiliated investment firm, National Asset Management.
Finra claims that while NSC authorized both transactions, it disregarded due diligence on the existence and legitimacy of new shares of the mentioned company for the second offering. However, as per the acceptance letter, NSC proposed and sold the second offering, receiving its clients’ cash and deceiving them regarding their purchase status.
According to Finra, the second offering did not buy Company A shares until almost ten months after the NSC authorized the flow of investor monies. The self-regulator indicated that Company A’s shares were reportedly purchased twice the highest price stated in the offer documentation.
NSC reportedly failed to monitor the leader of the pre-IPO firm, designated as “EK,” according to Finra.
NSC agreed to the punishment and payment of $363,447.67 in disgorgement, including interest, and a $300,000 penalty, without accepting or contesting the findings.
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