M.D. Sass Securities, L.L.C. (139760, New York, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $100,000.
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it distributed marketing materials that contained misleading descriptions of fund investment objectives. Certain of the investment objectives appearing in the communications that it distributed exceeded or failed to accurately capture the stated objective in the applicable private placement memorandum (PPM). The findings stated that the firm distributed marketing materials that contained unsubstantiated and exaggerated claims, misled by containing presentations or statements that were promissory of investment success or failed to reflect the inherent risks associated with investing in funds being promoted, contained unwarranted presentations in that the fund model provided did not have any relevance or correlation to the actual fund that the model was promoting, and/or contained a false and misleading statement regarding the funds.
Certain statements were reiterated due to the recurring nature of the communications. The firm allegedly distributed marketing materials regarding funds that contained unwarranted performance projections, and failed to provide material disclosure regarding the risks of investing in the hedge fund(s) and/or hedge fund strategies being discussed. The findings also stated that the risk disclosures contained in the communications were not clear and transparent statements of risk, particularly when compared to the disclosures in the relevant PPMs. The firm distributed at least one fact sheet that provided contradictory fund inception dates and distributed varieties of marketing materials that failed to provide a sound basis for evaluating certain of the information presented. Many contained a variety of violations that were continually reiterated as a result of the cyclical nature of the communications.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
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