National Securities Corporation (CRD #7569, Seattle, Washington) and Matthew G. Portes (CRD #4995542, Registered Principal, Chicago, Illinois) recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and ordered to pay a total of $175,000 in restitution to investors. Portes was fined $10,000 and suspended from association with any FINRA member in any principal capacity for six months. Without admitting or denying the findings, the firm and Portes consented to the described sanctions and to the entry of findings that the firm failed to have reasonable grounds to believe that certain private placements offered pursuant to Regulation D were suitable for customers. The findings stated that the firm, acting through Portes, as the firm’s Director of Alternative Investments/Director of Syndications, failed to adequately enforce its supervisory procedures to conduct adequate due diligence as it relates to an offering. The findings also stated that Portes and the firm became aware of multiple red flags regarding an offering, including liquidity concerns, missed interest payments and defaults, that should have put them on notice of possible problems, but the firm continued to sell the offering to customers. The findings also included that the firm, acting through Portes, failed to enforce its supervisory procedures to conduct adequate due diligence relating to other offerings.
FINRA found that Portes reviewed the PPMs for these offerings and diligence reports others prepared, but the review was cursory. FINRA also found that the due diligence reports noted significant risks and specifically provided that its conclusions were conditioned upon recommendations regarding guidelines, changes in the PPMs and heightened financial disclosure of affiliated party advances, but the firm did not investigate, follow up on or discuss any of these potential conflicts or risks with either the issuer or any third party. In addition, FINRA determined that the firm, acting through Portes, failed to enforce reasonable supervisory procedures to detect or address potential “red flags” as related to these offerings; and the firm, acting through Portes, failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations.
The suspension is in effect from June 20, 2011, through December 19, 2011.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about investments you made with National Securities Corporation and/or Matthew G. Portes, the securities attorneys of The White Law Group may be able to help. To speak with a securities attorney, please call the firm’s Chicago office at 312/238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
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