Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned Rainmaker Securities, LLC (Rainmaker Securities) and its President Glen Anderson (Anderson) (Case No. 2013035059001) alleging that From June 2011 through September 2014, Rainmaker Securities, acting through Anderson, failed to devote adequate time, attention, and resources toward supervision. FINRA found that the firm’s lack of a culture of compliance, Rainmaker and Anderson repeatedly violated FINRA rules that required to: (i) establish and maintain a supervisory system reasonably designed to achieve compliance with securities laws and regulations; and (ii) establish, maintain and enforce written supervisory procedures to supervise its brokers.
Anderson began in the securities industry in 2005. In January 2010, Anderson joined Rainmaker Securities to become its President. Rainmaker became a FINRA registered firm on March 18, 2005, and is approved to conduct business in the origination and sale of private placements. Rainmaker Securities has six branches and 34 registered persons.
FINRA’s investigation related to many aspects of the sale of private placements including solicitation, due diligence, false advertising, suitability documents, and more. The various allegations largely regard Rainmaker Securities’ marketing and sales of the following private placement securities offerings: (a) Buttonwood Social Network Fund LLC (Facebook Fund); (b) Eudora Global LLC (Eudora Global); (c) The Incubation Factory Technology Fund, LLC (TIF Fund); and (d) The Idea Fund LLC (IDEA Fund).
In connection with the marketing and sale of these offerings, the firm’s supervisory procedures required Rainmaker Securities and Anderson to perform adequate due diligence including obtaining information regarding the issuer in order to be able to make any needed suitability determinations. FINRA found that Rainmaker Securities supervisory procedures also had certain minimum due diligence guidelines that required the firm to: (i) question or assess the reasonableness of any assumptions underlying the issuer’s projections; (ii) review the issuer’s material agreements; (iii) inquire about the existence and status of any litigation involving the issuer; and (iv) review any public filings regarding the issuer. FINRA also found that the policies and procedures provided that prior to engaging in any private placement transaction the firm must complete a Private Placement Compliance Checklist.
FINRA found that with respect to each the foregoing offerings, Rainmaker Securities and Anderson failed to enforce the their supervisory procedures and policies and failed to evidence that adequate due diligence was conducted.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases where their broker has acted inappropriately. Our consultations are free of charge and the firm is only compensated if you recover.