AEI Fined $250,000 After Alleged Omissions Made In Fisker Automotive Offering

Investment fraud lawyersAdvanced Equities, Inc. (“AEI”) was fined and censured by the Financial Industry Regulatory Authority (“FINRA”) after allegedly failing to identify material information and correct omissions of material facts made by an issuer in connection with a private placement offering.

Alan Rosca and Joe Peiffer, securities practice attorneys at the Peiffer Rosca law firm, are investigating the matter.

AEI agreed to act as a private placement agent in connection with the offering of shares in Fisker Automotive, an American automobile maker that manufactures hybrid electric vehicles, according to FINRA. The shares were sold through limited liability companies to accredited investors.

In 2009, Fisker Automotive obtained a “Loan facility” in the approximate amount of $529 million, which was overseen by the U.S. Department of Energy and established pursuant to a federal program that provided loans to manufacturers of advanced technology vehicles, according to FINRA.

Under the terms of the loan agreement, Fisker Automotive could seek reimbursement for certain project and engineering costs associated with the production of two advanced technology vehicles, provided that Fisker Automotive was in compliance with certain financial covenants and project milestones required under the loan agreement, according to FINRA.

The private placement offering documents used in connection with offering of shares in Fisker Automotive disclosed that it was receiving financial assistance from the government, pursuant to the loan facility agreement, according to FINRA. The offering materials described Fisker Automotive’s continuing obligations to meet certain financial covenants and project milestones required under the loan facility agreement, and generally stated that it may not meet the covenants, according to FINRA.

An investment banker at AEI had overall responsibility for AEI’s role in the Fisker Automotive private placement offering, according to FINRA. His duties included obtaining information about the offering from Fisker Automotive, conveying that information to AEI’s brokers and participating in presentations made to potential investors, according to FINRA.

Before the issuing of the Series D-1 offering, the investment banker became aware that Fisker Automotive was unlikely to meet certain revenue and production volume covenants contained in the loan facility agreement in early 2011, according to FINRA. Around October 2011, the banker became aware that Fisker Automotive had decided to not access the loan facility agreement with the Department of Energy, according to FINRA.

The banker, while knowing that Fisker Automotive had decided to not access the loan facility, failed to inform any future investor of such material information, while AEI continued to offer the product for sale, according to FINRA.

It wasn’t until December 14, 2011 that investors interested in the Series D-1 offering were informed about Fisker Automotive’s decision to not access the Department of Energy’s loan facility, according to FINRA.

AEI consented to being censured and fined $250,000 by FINRA without admitting or denying FINRA’s findings.

The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting victims with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1169 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


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