EDI Financial Investigation — Failed Due Diligence in Connection with Private Placement Allegations
EDI Financial Pays Fine For Alleged Failed Due Diligence Processes in Connection with Private Placements Sold to Investors
EDI Financial failed to establish and maintain adequate supervisory procedures regarding private placements (most of the firm’s activity consisted of private placement offerings), specifically the due diligence performed on said private offerings and the documentation of such due diligence being performed, as well as failing to adequately supervise its off-side reps, according to a FINRA Letter of Acceptance, Waiver and Consent (AWC).
Selling unregistered private offerings is an important part of EDI‘s business, and from approximately January 2008 through November 2014, a substantial portion of EDI’s the Firm’s revenue came from sales of private placements, according to said AWC. Despite this importance, the AWC notes, EDI allegedly failed in several important respects to have adequate policies and procedures to oversee its private placement activities.
During the relevant period, EDI allegedly failed to adopt and implement supervisory systems and procedures reasonably designed to achieve compliance with its suitability obligations for the solicitation and sale of private placements, according to the AWC.
EDI, Censured, Lacked Adequate Written Procedures, Did Not Monitor Customers’ Exposure to Private Placements
EDI allegedly lacked adequate written procedures concerning the proportion of a customer’s assets that could be allocated to private placements, and did not effectively monitor customers’ exposure to private placements, according to the AWC.
In addition, the AWC further alleges that EDI, from approximately January 2008 through November 2014, also lacked adequate supervisory systems and procedures for conducting due diligence on private placements.
Consequently, the AWC also notes, EDI, which also did not cooperate with FINRA’s investigation, could not effectively supervise whether adequate due diligence was performed on private placement, and thus violated FINRA Rules, and hence, has been censured, and fined $100,000.
The Peiffer Wolf Carr & Kane Attorneys Investigating on Behalf of Investors
The Peiffer Wolf Carr & Kane investment recovery lawyers often represent investors who lose money as a result of investment misconduct. 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 misconduct may contact the investment recovery lawyers at Peiffer Wolf Carr & Kane, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at (585) 310-5140.