Arete Wealth Management, LLC (CRD #44856, Schaumburg, Illinois) recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it approved a private offering to customers and failed to perform adequate due diligence. Prior to offering shares to customers, the firm took some investigative steps but relied too heavily on the representations made by the issuer within the private placement memorandum (PPM). When the fund could not immediately verify the value of customers’ investments, the firm conducted additional investigative steps and discovered that one individual involved with the fund had misrepresented his educational credentials, and that the law and accounting firms supposedly involved with the fund had not performed services for it.
The findings stated that the Securities and Exchange Commission (SEC) determined that the umbrella corporation that owned the fund was involved in fraudulent activity; even though the fund was not directly involved in the fraud, the SEC seized the fund’s assets. The findings also stated that in addition to the firm’s inadequate due diligence, it failed to sufficiently document its due diligence, which only consisted of a PPM, some email correspondences between the firm and issuer, and a written timeline of meetings and phone calls. The findings also included that in connection with two other private offerings, the firm failed to document that adequate due diligence had been performed. In each of these three offerings, the firm’s files did not contain documentation evidencing a meaningful investigation or critical analysis of the offerings.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about a private placement investment you made with Arete Wealth Management, 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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