The Financial Industry Regulatory Authority (“FINRA”) announced on April 27th that Avenir Financial Group (“Avenir”), its CEO Michael Clements (“Clements”), and registered representative Karim Ibrahim a/k/a Chris Allen (“Ibrahim”), consented to an order halting further fraudulent sales of equity interests in the firm and promissory notes, pending a hearing on fraud charges related to the same offerings. The sales occurred from October 2013 through April 2015, and were often to elderly customers of the firm. According to FINRA, Avenir sold to several elderly investors including a 92 year-old customer who invested $250,000 for an equity interest in the firm, while Clements and Ibrahim falsely represented how the funds would be used, materially omitting and failing to disclose the firm’s financial difficulties, and thus willfully violated the Securities Exchange Act and FINRA rules. The misrepresentations and omissions that allegedly misled the elderly client included the fact that Avenir was in dire financial condition, as well as that he overpaid for his shares as compared to earlier investors.
Avenir is a New York, NY based full service broker-dealer. According to FINRA, during its 3-year operation as a FINRA member firm, Avenir and its branch offices raised over $730,000 in 16 issuances of equity or promissory notes, and most of the sales of equity and promissory notes were to elderly customers of the firm.
FINRA obtained the Cease and Desist Order based on its concern for ongoing customer harm and depletion of investor assets, prior to completion of a formal disciplinary proceeding against the firm and these individuals. Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, and order to pay restitution, censure, suspension or bar from the securities industry. The issuance of the disciplinary complaint represents the initiation of a formal proceeding by FINRA, in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.