Oak Hills Securities Sanctioned by FINRA Over Private Placements
The Financial Industry Regulatory Authority (FINRA) has sanctioned Oak Hills Securities, Inc. (CRD #145579) for multiple violations related to the firm’s private placement offerings. According to a recent Letter of Acceptance, Waiver, and Consent (AWC), Oak Hills agreed to a censure and a $125,000 fine for failing to properly handle investor funds and comply with federal securities laws and FINRA rules.
Background on Oak Hills Securities
Oak Hills Securities, based in Oklahoma City, Oklahoma, has been a FINRA member since 2008. The firm primarily conducts private placement and investment banking business, including sales of Oklahoma tax credit investment programs.
FINRA’s Findings
Between September 2019 and June 2024, Oak Hills acted as the exclusive placement agent for seven private placement offerings. FINRA found several areas of misconduct:
- Failure to Return Investor Funds – In multiple offerings, Oak Hills reduced minimum contingency amounts without returning investor funds, a willful violation of Exchange Act §10(b), SEC Rule 10b-9, and FINRA Rule 2010.
- Failure to Escrow Investor Funds – For six offerings, Oak Hills deposited investor funds into issuer-controlled accounts instead of required escrow accounts, in violation of Exchange Act §15(c)(2), SEC Rule 15c2-4, and FINRA Rule 2010.
- Failure to Timely File Private Placement Documents – In two cases, Oak Hills failed to submit offering documents to FINRA on time, in violation of FINRA Rule 5123.
As part of the settlement, Oak Hills consented to findings of willful misconduct, which subjects the firm to statutory disqualification under FINRA’s bylaws.
Risks of Private Placements
Private placements are alternative investments not subject to the same registration and disclosure requirements as publicly traded securities. While they may offer the potential for high returns and tax benefits, they also carry significant risks, including:
- Illiquidity – Investors may be unable to sell their interests for years, if ever.
- Lack of Transparency – Private placements are often complex and involve limited financial disclosures.
- High Risk of Fraud or Mismanagement – Without proper due diligence, investors may face unexpected losses.
The Oak Hills case underscores how compliance failures by brokerage firms can increase investor risk in already speculative investments.
Broker Due Diligence Responsibilities
FINRA rules require brokerage firms and their registered representatives to conduct reasonable due diligence on private placements before recommending them to clients. Firms must ensure offerings are suitable for each investor based on factors such as risk tolerance, financial situation, and investment objectives. When firms fail in these obligations, investors may have grounds for a claim.
Recovery Options for Investors – FINRA Arbitration
Investors who have suffered losses due to unsuitable investment recommendations, lack of due diligence, or brokerage firm misconduct may be able to pursue claims through FINRA arbitration. This forum allows investors to seek recovery of losses directly from the brokerage firm responsible for their investments.
The White Law Group is investigating potential claims involving Oak Hills Securities and its private placement offerings.
Free Consultation
If you invested in private placements through Oak Hills Securities and are concerned about your losses, the securities attorneys at The White Law Group may be able to help. We represent investors nationwide in claims against brokerage firms to recover investment losses.
For a free consultation, please call our offices at (888) 637-5510.
FAQs – Oak Hills Securities
What did FINRA sanction Oak Hills Securities for?
FINRA sanctioned Oak Hills for willfully violating securities laws and FINRA rules by failing to return investor funds, failing to escrow funds, and failing to timely file private placement documents.
What are the risks of private placements?
Private placements are high-risk, illiquid investments with limited disclosures. They can result in significant losses, especially if firms fail to conduct adequate due diligence.
Can I recover losses from private placements sold by Oak Hills Securities?
Possibly. Investors may be able to file a FINRA arbitration claim against Oak Hills for losses related to unsuitable recommendations or supervisory failures.
