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.
December 2011 - View all for this month
Jeffrey Rachlin (Principal)
AWC/2010021058403
Acting through Rachlin and another firm principal, Rachlin's firm negligently omitted material facts in connection with its sales of promissory notes to investors. 

The notes were issued by an entity which was controlled by a real estate developer. The firm, acting through Rachlin and another firm principal, negligently failed to disclose:
  • to investors that the entity had been experiencing cash flow problems and that the entity and other companies affiliated with the real estate developer had failed to make required interest payments to investors; and
  • that it was unlikely that the entity’s affiliated company would be able to make its scheduled principal payments totaling $10 million that were due to its note holders. 
Rachlin helped prepare a document called “Investor Letter” for a company; the letter was later distributed by his firm. The Investor Letter constituted a research report, but it failed to disclose a firm representative’s ownership interest in the company and his receipt of compensation from the company. Rachlin helped prepare presentations regarding the company, which the firm’s registered representatives used to solicit potential investors at seminars. The presentations contained statements and projections that were without basis and were false, exaggerated, unwarranted and/or misleading, and failed to provide a balanced presentation by omitting material information regarding the significant risks associated with an investment in the company.
Jeffrey Rachlin (Principal): Fined $10,000; Suspended 30 business days in all capacities; Suspended 1 months in Principal capacity only
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