The Financial Industry Regulatory Authority (FINRA) has slapped a penalty of $500,000 on New York’s Brookville Capital Partners for fraud regarding sales of a private placement offering and directed the firm to pay over $1m in full restitution to the affected customers.
In a May 2014 complaint, the firm was accused of fraud by FINRA in association with the sale of a private placement offering named Wilshire Capital Partners Group.
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The offering was designed to allow investors have an indirect interest in pre-initial public offering shares of Fisker Automotive. The conduct occurred between January 2011 and October 2011.
During this period, the firm solicited customers to invest in the offering, withholding an information that an individual with a criminal and regulatory background had effected transactions on behalf of Wilshire as Wilshire’s CEO and managing director.
Brookville did not divulge information of the individual named John Mattera, who had been sanctioned by the Securities and Exchange Commission (SEC) in 2010 for securities fraud and convicted of a felony in Florida in 2003.
The firm overall sold over $1m worth of interests in Wilshire to 29 customers, and got over $104,000 in commissions for the sales.
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By GlobalDataIn November 2011, SEC sued Mattera and others regarding a scheme including Wilshire. The scheme helped defraud investors of $13m, and Mattera has been imprisoned.
Moreover, all of Wilshire’s assets have been frozen by SEC following a court order. The assets include the interests owned by Brookville’s customers.
FINRA executive vice president and chief of enforcement Brad Bennett said, “Firms have a fundamental responsibility to ensure they provide all material information when they solicit customers to invest in a security.”
