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Apr 7, 2009 9:31 pm

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An irreverent Wall Street Blog
by Bill Singer

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FINBAR...FUBAR...Not much of a difference

Written: April 7, 2009

By Bill Singer

Brief Summary

On April 7, 2009, The Securities and Exchange Commission announced that it has halted the fraudulent conduct of Finbar Securities Corp., an unregistered West Covina, California broker-dealer, and its president Robert Tringham, a United Kingdom national who resides in Diamond Bar, California, and Portland, Oregon, has operated Finbar since at least 2006. On April 3, 2009, the Commission obtained an order freezing the assets of Finbar and Tringham, appointing a temporary receiver over Finbar, requiring accountings, prohibiting the destruction of documents, granting expedited discovery, and temporarily enjoining Finbar and Tringham from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for April 13. The Commission also seeks permanent injunctions, disgorgement, and civil penalties against Tringham and Finbar. 

Securities and Exchange Commission v. Finbar Securities Corp., et al., (United States District Court for the Central District of California, Case No. CV 09-2325 ODW /Apr. 3, 2009); SEC Lit.Rel. No. 20991 / April 7, 2009

Now You See It

Finbar Securities Corp.was was incorporated in California on March 17, 2006 but subsequently became a suspended California corporation, and is not registered with the Commission in any capacity. Robert Tringham, age 63, is a United Kingdom national, residing for the past seven years in Diamond Bar, California and Portland, Oregon. Tringham was Finbar's incorporator, president, CEO, secretary, and CFO, but he is not associated with any registered broker or dealer or investment adviser.

Since 2005, Tringham has been appropriating the identity of Finbar Securities Corp., a now defunct Oregon corporation that was registered with the Commission as a broker-dealer from 1987 to 2006 ("Finbar-Oregon"). In 2005 and 2006, Tringham attempted to purchase Finbar-Oregon from its last owner. However, after the National Association of Securities Dealers ("NASD", now part of the Financial Industry Regulatory Authority, or "FINRA") raised questions and concerns regarding Tringham's background, including a civil forfeiture action filed against him by the United States, Finbar-Oregon's owner withdrew his application to transfer ownership to Tringham (and so persisted even after Tringham offered him $200,000 to continue). The broker-dealer's registration was withdrawn in December 2006, and the corporation dissolved.

The California Finbar entity (the Defendant Finbar) was formed by Tringham in March 2006. It remains in existence to the present day, although it is currently on suspended status. Defendant Finbar has never been registered with the Commission as a broker-dealer. Because it operates as an unregistered broker-dealer, Finbar has never been examined by the Commission staff and never licensed through FINRA.

Now You Don't

Tringham has used the Finbar name and Finbar-Oregon's status as a registered, licensed entity to solicit investors since 2005. Several Finbar investors were told that Finbar offered and sold debt instruments and high yield risk-free investment opportunities and used funds in accounts, purportedly controlled by the investor, as collateral for Finbar to make profitable trades.

One investor, who invested $1 million with Finbar in late 2006, was told that the 

Defendants could generate returns of $25,000, or 2.5% per month, on her initial investment;  her funds would be segregated in her own account; and  that the funds would be used to buy and sell various instruments only if Finbar had a pre-existing buyer who would pay a higher price than the price Finbar paid for the instruments.

A European investor, who invested €1.83 million ($2.41 million), was told by Tringham that Finbar was a securities company established in 1987, was licensed by the Commission and NASD, and had offices throughout the United States. This investor was also told by Tringham that the main characteristics of the Finbar investment were 

a minimum contribution of €1 million was required;  the investment duration was for a minimum of one year;  the money would be placed in personal account, not used for trading, and would remain under the investor's control; and  a high yield would be obtained by trading various securities, such as bonds, notes, debt instruments, precious metals, derivatives and other instruments to obtain a "minimum profit margin of 100 basis points." 

As recently as March 13, 2009, account statements provided to investors falsely represent that Finbar is "a licensed Securities Dealer." Finbar's account statements also display the NASD logo, despite the fact that the use of the NASD name ceased in July 2007 (when it became part of FINRA), reference a clearing firm that is no longer in operation, and cite to securities purportedly held by investors with no recognizable CUSIP number, a unique alpha-numeric identification that is assigned to an issuer and type of security. The account statements indicate that investors have realized impressive returns on their initial investment. For example, for the investor who invested $1 million in late 2006, the most recent account statement indicates that she currently has a balance of nearly $2.8 million.

Despite the large balances reflected on the investors' account statements, Tringham and Finbar have thus far refused to honor these investors' repeated redemption requests.