No Recovery, No Fee

424-835-5733 | 310-525-3516

You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Eye on microcap stock sales: FINRA sanctions investment firm

First of all, today's post puts forth a few words about microcap stocks, given the singular niche they have in the investment world.

Microcap shares are offered by public companies with comparatively small market valuations. As such, they are linked with companies that are less than proven in the marketplace. Although some of those entities might become manifestly successful in the future, many of them failure to realize their corporate vision and go out of business.

Trading in less established business entities obviously encompasses more volatility and increases the chances for fraud and market manipulation.

Given that, federal securities regulators maintain a steady focus on investment firms' sales of microcap shares to clients. And when they find improprieties, they sometimes take action through fines, trading suspensions and the levying of additional exactions.

The global investment bank and brokerage firm Cantor Fitzgerald knows that well, having just been slapped by the Financial Industry Regulatory Authority for what the agency states was Cantor's violation of federal law connected to the firm's sale of unregistered microcap shares.

Those shares reportedly numbered in the billions, with FINRA stating that Cantor's selling activities were unaccompanied by the due diligence required pursuant to transactions involving "a high-risk business line."

FINRA fined Cantor $7.3 million for what regulators stated was lax supervision exercised by a managing director, the absence of any robust anti-laundering program to detect suspicious activities that can occur with microcap trades, and inadequate training of employees working with microcaps.

As is often the case with such enforcement actions, Cantor did not admit to any wrongdoing, although it did not contest FINRA's portrayal of its conduct and ultimate findings.

No Comments

Leave a comment
Comment Information

Our Office Location

The Law Offices of Marc I. Zussman
433 N. Camden Drive
Suite 730 
Beverly Hills, CA 90210       
Map & Directions

Local: 424-835-5733
Local: 310-525-3516
Toll Free: 866-451-2517
Fax: 310-525-3528