FINRA filed a complaint against BrokerBank Securities, Inc. and Chief Executive & Compliance Officer Philip Paul Wright for issuing "hundreds" of misleading press releases in violation of FINRA rules. The complaint alleges that the violative releases falsely implied that BrokerBank itself was the author of multiple research reports (when it was not) and that BrokerBank was recommending securities covered in the research reports (when it was not).
OHO Disciplinary Proceeding #2014041087701
According to the investigation, BrokerBank in a quest to generate new revenue fronted for a non-registered entity "SCS," which paid BrokerBank a fee of up to $100 per press release to submit releases to the PRN newswire service. The complaint indicates that 22 of the press releases failed to disclose this payment, and on multiple occasions contained misleading reports that omitted material negative information about companies that were referenced, such as auditory concerns.
The findings state that, "the headlines and content of the press releases were intentionally worded in ways designed to suggest the information provided in the releases and the referenced researched reports were produced by BrokerBank," when they were in fact written by SCS or another entity.
One misleading headline, for instance, read, "Shares of Vodacom Group Limited Appear Undervalued in this High-Yielding South-African Based Telecom Company by BrokerBank Securities, Inc." Two more glaring examples were, "Mining Materials of Mexico, Corp. Analyst Research Report by BrokerBank Securities, Inc." and "Propanc Health Group Shares Jump 22% - BrokerBank Securities Provides Insights." FINRA points out, again, that the headlines were misleading because BrokerBank Securities did not author research reports with those findings and did not recommend those securities.
In total, BrokerBank issued 376 press releases referencing research reports that recommended specific investments.
Other similarly referenced companies, shares, and securities with similarly misleading headlines included:
> Alliance Creative Group, Inc.
> Amazonica Corp.
> Elite Pharmaceuticals
> Fortitude Group, Inc.
> Global Links Corp.
> Mining Materials of Mexico, Corp.
> NanoTech Entertainment
> Novagant (Cannabis Growers Market)
> Petrotech Oil and Gas
> Propanc Health Group
> Seabridge Gold
> SoftBank (Merger with Sprint)
> Warp 9 Securities
> The Wet Seal, Inc.
> Vodacom Group Limited
The complaint noted that the SEC issued trading halts at least nine times in the securities of the various companies promoted by BrokerBank's press releases.
FINRA Enforcement allegedly found that BrokerBank as a firm had no policies, procedures or written supervisory systems in place to address the pay-for-publish business line, and that the firm and CEO/CCO Wright failed to establish policies relating to press releases. As such, FINRA charged BrokerBank and Wright with failure to supervise, making false, misleading or exaggerated communications with the public, and with conduct inconsistent with just and equitable principles of trade.
If you have invested with BrokerBank Securities, Inc., Philip Paul Wright, or with any broker, financial adviser or firm in any of the aforementioned securities based on false, exaggerated, or omissive information contained within the 376 misleading BrokerBank press releases and have suffered losses or damage to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.