FINRA Pushes Broker-Dealers to Take A More Active Role in Private Placement Securities Offerings

FINRA has made it clear that private placements are the organizations number one investor protection area for this year.  As such, FINRA has recognized that broker-dealers must take a more active role in the due diligence process of a Regulation D securities offering to adequately protect the investor. 

The issue of broker-dealer due diligence in private placement offerings comes on the heels of the collapse of two major deals in 2009: Medical Capital Holdings, Inc. and Provident Royalties, LLC.   Dozens of broker-dealers across the nation raised approximately $2.7 billion for these two offerings.

Many of these broker-dealers relied on third-party due diligence reports rather than conducting their own due diligence, even though they received a “due diligence fee” of up to 1% of the sale.  FINRA has made it clear in no uncertain terms that broker-dealers now need to take additional steps regarding the due diligence in private placement deals. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in a private placement investment, your losses may be recoverable through securities arbitration.  Please contact one of our attorneys at 312-332-0000 to discuss your recovery options.