FSC Securities Corporation, Others, Censured and Fined by FINRA

An AWC was issued, which censured and fined the following firms: FSC Securities Corporation (CRD #7461, Atlanta, Georgia), Royal Alliance Associates, Inc. (CRD #23131, Jersey City, New Jersey), SagePoint Financial, Inc. (CRD #133763, Phoenix, Arizona), and Woodbury Financial Services, Inc. (CRD #421, Oakdale, Minnesota). According to the FINRA filing: “FSC was censured, fined $50,000, and ordered to pay $$277,612.30, plus interest, in partial restitution to customers, Royal Alliance was censured, fined $35,000, and ordered to pay $171,500, plus interest, in partial restitution to customers, SagePoint was censured, fined $60,000, and ordered to pay $325,475.66, plus interest, in partial restitution to customers, and Woodbury was censured, fined $55,000, and ordered to pay $300,224.98, plus interest, in partial restitution to customers.” The partial restitution ordered to be paid back to customers should be equal to the commissions each firm received in connection with those respective customers’ investments. The censured firms—FSC Securities, Royal Alliance Associates, Inc., SagePoint Financial, Inc., and Woodbury Financial Services, Inc.—did not admit nor deny FINRA’s findings, though the firms did consent to the entry of findings that they “negligently failed to tell investors in an offering related to the alternative asset management firm that the issuer failed to timely make required filings with the Securities and Exchange Commission (SEC), including filing audited financial statements.” The FINRA filing further states: “[…] while representatives at the firms received a letter from the alternative asset management firm notifying them of delays and its stated intention to complete a forensic audit, the firms continued to sell limited partnership interests. FSC Securities made sales with a total principal amount of $4,265,890, earning $298,612 in commissions, Royal Alliance made sales with a total principal amount of $2,450,000, earning $171,500 in commissions, SagePoint Financial made sales with a total principal amount of $4,951,546, earning $343,308 in commissions and Woodbury Financial made sales with a total principal amount of $4,638,928, earning $324,725 in commissions. However, in connection with these sales, the firms’ representatives did not inform the customers that the issuer had not timely filed its audited financial statements with the SEC or the reasons for the delay. The delay in filing audited financial statements was material information that should have been disclosed. Subsequently, the SEC filed a complaint against the alternative asset management firm and other defendants, alleging, among other things, that the defendants engaged in securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. (Case No. 1:21-cv-00583, E.D.N.Y.).” Additionally, the United States Department of Justice has also brought criminal charges against the founder of the alternative asset management firm and CEO, as well as two other executives. The FINRA filing states that the USDOJ is “charging, among other things, securities fraud, mail fraud, and wire fraud (Case No. 1:21-cr-54, E.D.N.Y.).” (FINRA Case #2018060895801)