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FINRA Sanctions N.Y. Firm, Bans Exec

FINRA Sanctions N.Y. Firm, Bans Exec

The Financial Industry Regulatory Authority issued $1.5 million in sanctions against Brookville Capital Partners on Thursday and barred the firm’s president for fraud.

The industry regulator found that between January 2011 and October 2011, Uniondale, N.Y.-based Brookville and its president Anthony Lodati defrauded customers through the sale of a private placement offering called Wilshire Capital Partners Group LLC.

The firm claimed investors would have an indirect interest in pre-initial public offering shares of Fisker Automotive. But FINRA found Lodati and Brookville failed to perform adequate due diligence and therefore did not have a reasonable basis to believe the Wilshire investment was suitable, according to Thursday's order.

Lodati, who was in charge of the due diligence in this matter, allegedly learned that John Mattera—who had been sanctioned by regulators previously and convicted of a felony—made transactions on behalf of Wilshire as Wilshire's CEO and managing director. Instead of disclosing Mattera's past issues, he and the firm purposely withheld this information and continued recommending the investment, FINRA claimed.

"Firms have a fundamental responsibility to ensure they provide all material information when they solicit customers to invest in a security,” Brad Bennett, FINRA's executive vice president and chief of enforcement, said in a statement Thursday. “FINRA has zero tolerance for firms and their registered representatives who intentionally withhold that information.”

In total, Brookville sold over $1 million worth of interests in Wilshire to over two dozen investors. Brookville also received more than $100,000 in commissions for the sales. In Thursday’s order, FINRA ordered the firm to pay a full restitution to the victims and fined the firm $500,000.

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