A Financial Industry Regulatory Authority Inc. hearing officer on Wednesday expelled Pinnacle Partners Financial Corp. and barred its president, Brian Alfaro, for alleged fraudulent sales of oil and gas private placements.
The hearing officer, Lawrence Bernard, issued a default decision against Mr. Alfaro, who declined to defend himself at a February hearing.
In April, Finra indefinitely suspended Pinnacle and Mr. Alfaro for failure to comply with an earlier cease and desist order.
Mr. Bernard, the hearing officer, also ordered the San Antonio, Texas-based firm and Mr. Alfaro to buy back the 11 private placements at issue, or refund the 15% in sales commissions earned on the deals.
Finra claimed that Mr. Alfaro and Pinnacle ran a boiler room operation from August 2008 to March 2011 that raised over $10 million from more than 100 investors.
It is unclear whether Mr. Alfaro will buy back the private placements at issue or refund the sales commissions since he is no longer associated with the securities industry, but the ruling does highlight the increasing problem of fraudulent oil and gas deals marketed and sold by FINRA registered broker-dealers. Other examples include Provident Royalties and Striker Petroluem (both allegedly multi-million dollar ponzi schemes).
Brokerage firms and financial advisors have a fiduciary duty to their clients to perform due diligence on any investment prior to recommending it for sale and to ensure that the investment is appropriate in light of the client’s age, investment experience, net worth and investment objectives.
The problem with this oil and gas deals is that they pay an enormous commission to the broker-dealers that agree to sell them (often between 10-15%) and the firm neglects to perform the proper due diligence.
If you have suffered losses in an oil and gas private placement sold to you by a financial professional, the securities attorneys of The White Law Group may be able to help. Please feel free to call 312/238-9650 for a free consultation.
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.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.