FINRA suspended Jeffrey Stephen Geraci and ordered him to pay $50,000 in restitution to a customer for making an unsuitable recommendation of an MICG Wealth Management, LLC speculative private placement to a customer.
Disciplinary Proceeding #2010023044101
According to the findings, Geraci's customer—a widow and retired bookkeeper—described her risk tolerance as "moderate." Investigators described the customer as an unsophisticated investor.
MICG Investment Management, LLC, meanwhile, was Geraci's employer and according to FINRA, was failing, losing upwards of $1.2 million in 2009. MICG was also under investigation by FINRA at that time.
In an effort to attract new business and new brokers, MICG Wealth Management, parent to MICG Investment Management, developed the new MICG private placement offering, which was described as, "very speculative" and associated with a series of three-year convertible debt instruments with a maturation date of December 2012.
The MICG private placement memorandum specified the offering would only be suitable for accredited investors with tolerance for the risk associated with a "very speculative" product and illiquid investments.
The investigation states that when Geraci recommended the offering to his elderly client, he described the offering as "suitable," even though his customer was a non-accredited investor with a conservative investment outlook.
FINRA deemed the investment unsuitable because of the retired customer's investment objectives and risk profile which were not consistent with the speculative product offered, a determination that Geraci's due diligence in investigating the MICG offering was not reasonable and that the risks associated with the product were not appropriate for the investor.
If you have invested with Jeffrey Stephen Geraci, MICG Investment Management or with any broker, broker-dealer or other firm whose unsuitable recommendations have run contrary to your investment objectives, a product's private placement memorandum or have otherwise proven harmful to your interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.