FINRA Censures and Fines CIM Securities
CIM Securities LLC, a New Jersey-based independent investment bank, has reportedly been censured and fined $70,000 by the Financial Industry Regulatory Authority (FINRA) for a series of alleged securities violations, according to a letter of acceptance published by FINRA.
Between April and September 2022, CIM allegedly conducted an unregistered distribution of securities by selling a private placement offering to one investor without an available exemption from registration. This reportedly violated Section 5 of the Securities Act of 1933, which prohibits the sale of securities unless properly registered or exempt.
Red Flags
During the same period, CIM reportedly failed to address several red flags concerning the issuer of the offering. The issuer purportedly engaged in general solicitation by issuing press releases and referring the investor who purchased the offering. FINRA noted that the issuer, acting as a compensated solicitor, reportedly had a history of fraud, including prior convictions for wire fraud and money laundering related to a fraudulent real estate investment scheme in 2013. The issuer was also reportedly barred by the SEC but did not disclose this background to CIM. The issuer allegedly provided falsified identity verification documents. Once CIM uncovered this alleged deception, the firm terminated its involvement with the issuer, according to FINRA.
In addition to these violations, FINRA found that from June to September 2022, CIM allegedly distributed sales communications that failed to disclose the risks associated with the offering. These communications purportedly contained misleading, promissory, and unwarranted statements, making them unfair and unbalanced.
Furthermore, from September 2021 to January 2024, CIM reportedly did not establish or maintain adequate written supervisory procedures to ensure compliance with its due diligence obligations for private placement offerings. The firm also allegedly failed to meet filing requirements for five private placement offerings between September 2021 and June 2023.
CIM Securities – Regulation Best Interest
These alleged violations were also a failure to comply with Regulation Best Interest (Reg BI), which requires broker-dealers to act in the best interests of their customers. Despite the findings, CIM reportedly agreed to the censure and fine without admitting or denying the allegations. In February 2024, the firm amended its written supervisory procedures in an effort to address these compliance issues.
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If you are concerned about investment losses, please contact the securities attorneys at The White Law Group. For a free consultation, please call the offices at 888-637-5510.
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.
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Last modified: January 13, 2025
