The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
January 24, 2018
In the Matter of AmericaFirst Capital Management, LLC, Rick A. Gonsalves, and Robert L. Clark, Respondents (Order Instituting Administrative and Cease-And-Desist Proceedings, Making Findings, Imposing Sanctions, and Cease-And-Desist Order; '33 Act Rel. No. 10454; Invest. Adv. Act. Rel. No. 4848; Admin. Proc. File No. 3-18349 / January 23, 2018), https://www.sec.gov/litigation/admin/2018/33-10454.pdf the "Summary" states:
These proceedings concern disclosure violations by AmericaFirst Capital Management, LLC ("AFCM") and its two principals, Rick Gonsalves and Robert Clark, while selling promissory notes to individual retail investors, including the firm's advisory clients. From December 2012 through February 2015 ("the relevant time period"), AFCM was a registered investment adviser that was experiencing cash flow issues and turned to borrowing cash from investors in order to cover its business expenses. While soliciting investors to purchase or renew $2.7 million in AFCM's promissory notes, Clark - who was directed by AFCM's CEO Gonsalves - gave the impression to investors that AFCM was a profitable business and failed to disclose that there was a risk of default associated with the promissory notes. In reality, the firm for several years had experienced increasingly negative net worth and decreasing net income, and had been sustaining its business operations through cash raised from the promissory notes sold to investors. As a result of their failure to exercise reasonable care in providing investors with complete and accurate disclosures regarding AFCM's financial health, AFCM, Gonsalves, and Clark violated Section 17(a)(2) of the Securities Act; and AFCM and Gonsalves violated, and Clark caused AFCM's violations of, Section 206(2) of the Advisers Act.
In anticipation of the institution of proceedings by the SEC but without admitting or denying the findings, Respondents submitted an Offer of Settlement, which the federal regulator accepted. Respondents were ordered to Cease-And-Desist from violating the Securities and the Advisers Act. Respondent AFCM was Censured and ordered to pay a $50,000 civil money penalty. Respondents Gonsalves and Clark were each ordered to pay a $25,000 civil money penalty. READ FULL TEXT SEC OIP
Stockbroker Expunges 7 Year Old UBS Customer Suitability Complaint (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/3788/finra-suitability-expungement/
Six years after a customer complained about allegedly unsuitable trades, a registered representative files a FINRA expungement arbitration challenging the posting of the customer's allegations on his industry record. Given the time that has passed, that's going to be quite a challenge. One FINRA arbitrator handled this case and provides us with a thoughtful rationale for recommending expungement. It's an interesting seven-year journey from customer complaint to a FINRA Arbitration Decision, and an intriguing exercise in how the pros and cons of such a case are weighed.
http://www.brokeandbroker.com/3788/finra-suitability-expungement/
Six years after a customer complained about allegedly unsuitable trades, a registered representative files a FINRA expungement arbitration challenging the posting of the customer's allegations on his industry record. Given the time that has passed, that's going to be quite a challenge. One FINRA arbitrator handled this case and provides us with a thoughtful rationale for recommending expungement. It's an interesting seven-year journey from customer complaint to a FINRA Arbitration Decision, and an intriguing exercise in how the pros and cons of such a case are weighed.