NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

Stonehurst Securities, Inc.
AWC/2007007190601

The Firm distributed a mailing referencing private placements offered by the firm that were represented to be exempt from registration pursuant to SEC Rule 506 of Regulation D, which requires compliance with SEC Rule 502 that prohibits general solicitations. Because individuals who received the mailing lacked a pre-existing business relationship with the firm, the mailing was considered a general solicitation in contravention of SEC Rule 502 and therefore, the firm’s transactions did not qualify for an exemption under SEC Rule 506--no other exemption was available and the securities were not registered. Individuals made investments in the offerings and the transactions constituted the sale of unregistered securities. The firm’s supervisory system and its written supervisory procedures addressed private placements but were not reasonably designed to achieve compliance with the registration requirement of Section 5 of the Securities Act of 1933 or the eligibility requirements for Regulation D exemptions. The system and procedures did not provide adequately for the detection and prevention of general solicitations by firm personnel. 

Stonehurst Securities, Inc.: Censured; Fined $25,000