FINRA Reportedly hits Canaccord Genuity Wealth Management (USA) for Supervisory Failures with Private Placement Investments
According to a Letter of Acceptance Waiver and Consent posted last week, the Financial Industry Regulatory Authority (FINRA)reportedly sanctioned Canaccord Genuity Wealth Management (USA) on September 8 for supervisory failures in connection with 12 private placement offerings. Canaccord reportedly consented to a censure; a $200,000 fine; and it will certification that it will address and remediate the issues.
From March 20 17 through March 2020, Canaccord purportedly failed to establish, maintain, and enforce a supervisory system, including written procedures, in regards to sales of private placements in violation of FINRA Rules 3110 and 2010.
FINRA also found that between March 2017 and August 2018, Canaccord allegedly failed to timely file required documents with the regulator related to 12 private placements sold by its representatives. Further, from March to June 2017, Canaccord purportedly allowed an unregistered person to engage in its securities business, in violation of FINRA rules.
What is Failure to Supervise?
FINRA Rule 3110 (Failure to Supervise) requires a firm to establish and maintain a system to supervise the activities of its associated persons that is reasonably designed to achieve compliance with securities laws and regulations and FINRA rules.
The rule gives requirements for a firm to have reasonably designed written supervisory procedures (WSPs) to supervise the activities of its associated persons and the types of businesses in which it engages.
Among other things, a firm’s WSPs must address supervision of supervisory personnel and provide for the review of a firm’s investment banking and securities business, correspondence and internal communications, and customer complaints. WSPs should describe:
- the specific individual(s) responsible for each review,
- the supervisory activities such persons will perform,
- the frequency of the review, and
- the manner of documentation.
Reg D Private Placement Investments
Private placements can carry significant risk, and you may lose all of your investment.
Since they are not traded on any exchange, private placement offerings are typically illiquid investments. There are often legal or contractual restrictions on your ability to transfer your holdings, and even if sale of your holdings is permitted there may be no buyers. You may need to hold these securities for an indefinite period of time.
Companies that issue unlisted securities may provide little or no transparency into their ongoing operations and financial condition.
Some investments may make periodic distributions, but some may not make any.
To learn more, please see: Regulation D Private Placement Fraud Attorneys
Potential Lawsuits to Recover Investment Losses
Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.
If you are concerned about your investments with Canaccord Genuity Wealth, the securities attorneys at The White Law Group may be able to help you. For a free consultation with an attorney, please call (888) 637-5510.
The foregoing information, which is all publicly available, is being provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.
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