Lau sold preferred stock through a private placement while not appropriately registered to sell that product.
Lau informed a customer about a private offering of preferred stock in a company, stating that he intended to invest in the company, and provided the customer with brochures, disclosure documents and an application, including a subscription agreement, to invest in the company. The customer completed the application for a $300,000 investment in the company and returned it to Lau. Because Lau knew that he was not appropriately registered to sell the product to the customer, he asked his supervisor to sign the subscription agreement as the selling representative.
The supervisor agreed and signed the subscription agreement, and submitted the application, including the subscription agreement, to the member firm for processing. The firm approved the investment and executed the transaction; and, as such, Lau caused the firm’s books and records to be inaccurate by having his supervisor sign the subscription agreement as the selling representative.