Silver Law Group recently filed FINRA arbitration claims against a broker-dealer for the recommendation and sale of an unsuitable Regulation D (“Reg. D”) private placement. The broker-dealer marketed the investment as having huge upside because the company’s initial public offering (“IPO”) was coming up. However, despite repeated promises to customers, the IPO never came and customers’ investments are now worthless.
The suit alleges that much of the company’s marketing materials was designed to mislead investors into believing the company was profitable and poised for a lucrative IPO. The broker-dealer failed to conduct adequate due diligence on the company and passed this false or misleading information along to its customers. The broker-dealer turned a blind eye to the risks its customers faced because it received a high commission for the capital raised. Continue reading