Securities Lawyers Blog
The securities lawyers of Gana Weinstein LLP are investigating customer complaints and a FINRA action against broker William Watson (Watson). The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2013038091901) against Watson. In addition, there are at least five customer complaints against Watson and four judgements or liens. In the FINRA regulatory action against Watson, the agency alleged that from March 2013 through June 2014 while employed at Finance 500, Inc. (Finance 500) Watson participated in securities offerings with four different issuers where he used marketing materials that were not fair and balanced because they failed to discuss each of the issuers poor financial performance and made misleading unwarranted or unsupported statements.
FINRA alleged that Watson was the Vice President of Corporate Finance at Finance 500 and identified companies that needed financing and worked with those companies to sell the companies’ securities to customers. FINRA found that Watson used or permitted issuers to use marketing presentations that were not fair and balanced, made misleading, unwarranted or unsupported statements, and failed to disclose Finance 500’s name and involvement in the offerings. FINRA determined that Watson also sent these presentations to retail customers through email and used them on telephone conference calls with retail investors. Watson also allegedly used, or permitted issuers to use, powerpoint presentations that contained inadequate risk disclosure and failed to provide a balanced presentation of the risks and rewards of the investment.
Specifically, FINRA alleged that for issuer by the initialed “BB” which upon information and belief refers to Bill the Butcher, Inc., (BB) the presentations failed to disclose BB’s accumulated deficits, net losses, or the fact that BB’s auditor had issued a “going concern” opinion. In addition, the BB presentations compared the sales-to-investment ratio of BB, a start-up company, to that of well established fast-food restaurants. Similar issues were cited by FINRA for presentations for issuers initialed CP, GE, and SC. FINRA found the lack of disclosures from the foregoing presentations to be in violation of industry rules.