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.
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