Peaslee
participated in
private securities transactions by soliciting individuals to
invest approximately $399,850
in an offering of a company he owned and controlled without
providing written notice
of his intent to participate in the sale of an offering to his
member firm, and failed to
obtain his firm’s written approval before engaging in such
activities.Peaslee’s firm did not permit registered representatives to
participate in the sale of
private equity offerings.
The offering’s purpose was to capitalize
an entity through which
Peaslee operated his securities business, which he wholly owned.The offering purported to be issued in compliance with Rule
506 of Regulation D of
the Securities Act of 1933 (Reg. D), but Reg D documents were not
filed with the SEC.
Peaslee did not receive any written
representation from any of
the investors that they met the requirements to be an accredited
investor.
FINRA found that Peaslee negligently made untrue statements of
material facts and/or
omitted to state material facts in a PPM and subscription
agreement for the offering. In
reliance on Peaslee’s misrepresentations, the customers and the
non-customer invested
in the offering.
Peaslee failed to establish
an escrow account in
the name of the issuer, his business entity, and no investor funds
from the offering were
ever held in an escrow account; rather, Peaslee deposited investor
funds into the entity’s
operating account and immediately began making withdrawals. In
addition, Peaslee distributed investor funds before the
minimum contingency
was satisfied, thereby rendering the representations in the
offering documents false and
misleading.