Private Placement Due Diligence and FINRA Anti-Fraud Enforccement

more+
less-

As a result of a broker-dealers’ special relationship with a customer, when a broker-dealer recommends a security, they are under a duty to conduct a reasonable investigation concerning that security and the issuer’s representations about it. As a result, when the broker-dealer makes a recommendation to a customer, the broker-dealer has engaged in a reasonable investigation and its recommendation is based upon the conclusions resulting from such investigation. The Financial Industry Regulatory Authority (FINRA) believes that a failure to comply with this duty is a violation of the antifraud provisions of the federal securities laws and, particularly, Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 there under by the SEC. In keeping with the utilization of all tools at their command, FINRA also made it clear that such activities could also constitute a violation of FINRA Rule 2010, which requires adherence to just and equitable principles of trade, and FINRA Rule 2020, prohibiting manipulative and fraudulent devices.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Daniel LeGaye, The LeGaye Law Firm, PC | Attorney Advertising

Written by:

more+
less-

The LeGaye Law Firm, PC on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×