Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2011
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.
Cambridge Legacy Securities, L.L.C. and Tommy Edward Fincher (Principal)
AWC/2009020319001

Cambridge failed to have reasonable grounds to believe that a private placement offered pursuant to Regulation D was suitable for any customer.

Acting through Fincher, its Chief Compliance Officer and registered principal, the Firm failed to

  • conduct adequate due diligence of the private placement offering before allowing its brokers to sell the security,
  • maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations, and
  • enforce reasonable supervisory procedures to detect or address potential red flags as it related to the offering.

Fincher was the principal responsible for conducting due diligence on the offering and approved the security as a new product available for firm brokers to sell to their customers; he allowed the firm’s brokers to continue selling the security despite its ongoing failure to make overdue interest and principal payments. The Firm failed to have reasonable grounds for allowing the continued sale of the security even though the firm, through Fincher, was aware of numerous red flags concerning liquidity problems, delinquencies and defaults, but allowed its brokers to continue selling the security.

Cambridge Legacy Securities, L.L.C.:Censured; Ordered to pay $218,400 in restitution to customers. If the firm fails to provide FINRA with proof of restitution, it shall immediately be suspended from FINRA membership until such proof has been provided.

Tommy Edward Fincher: Fined $5,000; Suspended 6 months in Principal capacity only.

Bill Singer's Comment
Among the notable warnings from FINRA to start off 2011 is its concern that supervisors may not be connecting the dots when confronted with so-called "red flags." In this case, we see a private placement that is emanating trouble in terms of failed payments and other indicia of potential problems. Clearly, if your firm is going to go down the Reg D road, you're goint to have to keep your eyes and ears open to a far greater extent than was required in years past.
Enforcement Actions
Search in Cases of Note : FINRA
Months
 
Cases of Note : FINRA Archive
Tags