FINRA fined Irvine, California-based firm Accelerated Capital Group ("ACG"), formerly known as Mark Stewart Securities, $32,500 for fabricated testimonials and a series of misleading statements and actions that appeared in the firm's communications materials, including on the firm's website. FINRA also disciplined ACG for supervisory failures related to an escrow and common stock program.
According to the investigation, ACG's misconduct took place between October 2010 and May 2011 and quickly took an electronic form as the firm allegedly incorporated fake testimonials into its internet webpage. FINRA alleges that two ACG representatives also maintained separate business-related websites that contained exaggerated and "unwarranted" or otherwise misleading and inaccurate representations.
The first personal website was called Blue Crown Financial and portrayed the entity as an independent investment firm subsidiary of ACG. FINRA countered that Blue Crown Financial was not an investment firm nor a subsidiary of ACG.
The second website, The Pear Model, advertised a personal pension plan, advertising "the highest possible degree of safety and profitability," which FINRA claims was an exaggerated and unwarranted statement.
In its finding, FINRA investigators were blunt, stating that "all of the testimonials were fabricated; none of the individuals [portrayed] ever had accounts at ACG." The website did not state that the experiences portrayed, however fake they might have been, were not a guarantee of future success.
FINRA investigated one of these so-called customers even further, discovering that this individual held a majority ownership interest in ACG, a fact that was not disclosed.
Investigators also found that ACG grossly exaggerated the size and score of its operation, its website containing a world map graphic suggesting the firm had offices throughout the globe, including in New York, South America, Europe, Asia and Australia.
In reality, however, the firm had just two offices in regional proximity, one in Orange County, California and the other in Scottsdale, Arizona.
The website also advertised a rapid growth strategy, stating, "ACG is looking for 250 great financial advisors and financial practices primarily in the Western United States."
Regulators researched ACG's Membership Agreement and found that its terms limited the firm to just 20 associated persons, such as advisors and brokers, who have direct contact with customers.
FINRA cited a series of ACG PowerPoint presentations in which the firm sold investment interests in Castle Arch Opportunity Partners II, Clear Peak Energy Inc. and Western Credit Service Company, LLC.
Upon review, investigators determined the Castle Arch and Clear Peak Energy presentations advertised exaggerated and unwarranted performance predictions, furthermore concluding that Castle Arch was a distressed real estate fund, Clear Peak Energy a start-up entity related to solar electric power plants and Western Credit Service a payday lender, all private offerings which were speculative and illiquid investments in start-up companies available only to accredited investors.
Finally, FINRA fined ACG for supervisory failures related to a membership program known as TFB AZ designed to purchase units in an entity that owned Class B shares of Facebook stock. Regulators cited violations of the ACG written supervisory procedures (WSPs), concluding that ACG caused investor funds to be deposited into a client trust account held by TFB's attorney instead of adhering to WSP regulations requiring the funds to be "promptly transmitted" to a designated escrow account at a bank.
If you have invested with Accelerated Capital Group, formerly Mark Stewart Securities, or with any broker, financial adviser or firm whose exaggerated, unwarranted or materially false statements, advertisements or omissions of material facts and supervisory violations have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.