Recent FINRA Disciplinary Fines And Sanctions

Arque Capital, Ltd. submitted a letter of acceptance, waiver, and consent in which the firm was censured and fined $50,000. Arque Capital did not admit or deny the findings but consented to the penalties and to the entry of findings that it sold about $3.53 million in an alternative investments called Renewable Secured Debentures to roughly forty investors while providing them with the company's sales kit, which included a brochure with misleading statements. According to the findings, the firm was responsible for conducting due diligence on the company and the debentures as well as advertising pieces pertaining to the debentures. Arque Capital sent out solicitations with misleading statements, omitted material facts, and did not provide a sound basis for evaluating the securities that were being offered. Joseph Brandon Westphal was banned from association with any member of FINRA in any capacity. The penalty was the result of findings that he did not respond to FINRA's request for documents and information. [...]

Should The SEC Update Its Definition Of Accredited Investors?

Currently, the SEC defines an accredited investor a someone who either has an income of at least $200,000 ($300,000 for couples) or a net worth of at least $1 million, without including the individual or couple's primary residence. Some feel that this definition is archaic and poorly suited to prevented "unsophisticated" investors from making unsuitable investments. These proponents of a rule-change argue that financial thresholds do not give enough protection to investors whose net worth is based on retirement savings or non-liquid holdings. They would like to see the SEC upgrade the definition in such a way that expands the potential pool of investors and reinforces verification that they qualify. In 2012, the SEC estimated the private placement market to be about $1.6 trillion. That number has assuredly risen since then, meaning that much money is at issue here. The SEC is certainly making attempts to change the definition. A couple of weeks ago, all except one member of the [...]