FINRA ordered the entities to pay over $3.2m in restitution for selling high-risk investments connected to Provident Royalties, Medical Capital Holdings and DBSI, which ultimately failed and caused significant investor losses.
The agency said it found the broker-dealers did not have adequate supervisory systems in place to identify and understand the inherent risks of these offerings and, as a result, many of the firms failed to conduct adequate due diligence of these offerings.
The broker/dealers named in FINRA’s complaint include Texas-based NEXT Financial Group which was ordered to pay $2m in restitution and fined $50,000; Nebraska-based Securities America censured and fined $250,000; Massachusetts-based Investors Capital Corporation ordered to pay $400,000 in restitution.
New Jersey-based Garden State Securities ordered to pay $300,000 in restitution; North Dakota-based Capital Financial Services ordered to pay $200,000 in restitution; and Washington-based National Securities Corporation ordered to pay $175,000 to customers.
Vermont-based Equity Services was censured, fined $50,000 and ordered to pay investors $164,000 in connection to the sale of DBSI, and Florida-based Newbridge Securities was fined $25,000, for its sale of DBSI and a Medical Capital private placement.
