Golden Spoon Frozen Yogurt

The Financial Industry Regulatory Authority (FINRA) has barred broker Richard Manchester (Manchester) over allegations that his participation in several private placements caused his employing firm to fail to establish an escrow account for several contingency offerings, broke escrow before the minimum contingency amounts were met, and made unauthorized use of offering proceeds by lending offering proceeds to other private placements. FINRA found that Manchester’s acts violated of Section 10(b) of Securities Exchange Act of 1934 and Rules 10b-5 and 10b-9 thereunder, NASD Rule 2110, and FINRA Rules 2020 and 2010.

From July 2004 through December 2010, Manchester was associated with Girard Securities, Inc. (Girard Securities). During this time Manchester was involved in the offering of several private placement offerings. One offering was Pacific Yogurt Partners, LLC (Pacific Yogurt) a limited liability corporation formed in 2007 to acquire franchise rights from Golden Spoon Frozen Yogurt. The Pacific Yogurt private placement offered Series B and Series C Units in a contingency offering requiring the raising of a minimum amount of funds for the offering to proceed. FINRA alleged that even though the private placement memorandum stated that funds received would be returned to investors if the minimum sales contingency was not met the funds were released to the issuer. In addition, under the securities laws investor funds received before the satisfaction of the minimum sales contingencies were required to be deposited into a bank escrow account. Instead, FINRA found that the funds provided directly to Pacific Yogurt, the issuer. FINRA alleged that Manchester’s conduct constituted a willful violation of Rule 10b-9, and a violation of NASD Rule 2110 and FINRA Rule 2010.

Another private placement Manchester was involved in offering was WaveWise, LLC (WaveWise). WaveWise was created to acquire interest in IdeaEdge, Inc. (IdeaEdge). The offering sought to purchase up to 2,625,000 shares of IdeaEdge common stock, at $0.80 per share, with warrants to purchase a share of common stock at $1.00 per share for every four shares of common stock purchased at $.80 per share. Thereafter, IdeaEdge changed its name to Social Wise, Inc. (Social Wise), which subsequently changed to Bill My Parents. Like Pacific Yogurt, FINRA alleged that investor funds received before the satisfaction of the minimum sales contingency were required to be deposited into a bank escrow but instead were deposited into a bank account in the name of WaveWise.