Securities Lawyers Blog
John S. Turo (a/k/a James S. Turo) recently reached a settlement with the Financial Industry Regulatory Authority (FINRA) concerning allegations that he sold unregistered, nonexempt securities through general solicitation of the public in violation of Section 5 of the Securities Act of 1933 and in violation of NASD Rule 2110 and FINRA Rule 2010. The FINRA settlement result in a fine of $20,000. Turo became a registered securities representative and principal in 2003. From May 2005 until April 2007, Turo was associated with Innovation Capital, LLC. Starting in 2001, Turo was also associated with GT Securities, Inc. (GT Securities a/k/a Growthink Securities, Inc., Growthink, Inc., GTK Partners). Turo is the Managing Director and Chief Compliance Officer of GT Securities.
From 2008 and through 2010, Growthink issued securities to raise capital for GT Securities. In order to raise the capital, Turo sold private placements investments in Growthink to approximately 46 investors totaling $2,611,124. FINRA alleged that the private placement sales were nonexempt securities offerings that violated Rule 506 of Regulation D requiring registration and prohibits general solicitation of the investment to the public.
In order to sell the Growthink securities, FINRA alleges that Turo held webinars online on topics such as strategic business planning, entrepreneurship, and private equity investing that included general solicitations for investments in Growthink. The webinars were open to the general public. In addition, investors did not need a pre-existing relationship with Growthink or Turo in order to register and participate in the webinars. Thus, the webinars lacked a pre-screening process in order to limit the participants to only those who would qualify as accredited investors under the securities laws governing the sale of private placements. FINRA’s complaint alleged that the foregoing sales practices and the private placement offering itself violated various securities laws.