HFP Capital Markets Expelled for Zero-coupon Note Alleged Fraud, Ordered to Pay $2,980,000 Fine

Rochester stockbroker fraud attorneyHFP Capital Markets LLC, of New York, New York, was reportedly expelled from FINRA membership, and ordered to pay $2,980,000, plus interest, in reparation to customers after FINRA found it generated the fraudulent sale of approximately $3 million worth of senior secured zero-coupon notes. HFP sold the private offerings of the notes to customers while knowingly misrepresenting and omitting material facts about them, FINRA alleges.

Notes Were Misrepresented, FINRA Alleges

According to FINRA, these notes were misrepresented as collateralized by barrels of leftover mining materials (or ore concentrate), and that said collateral was adequately valuable to secure an investment in the notes. In reality, however, the ore concentrate held no real value, and HFP failed to disclose material facts about how the offering proceeds were to be implemented, and about the ownership and management of the issuer, FINRA alleges.

Most HFP Customers Lost Entire Investment

While a small number of customers got money back after filing complaints with HFP through replacement transactions, the remaining customers lost the entirety of their investment of the $2.98 million, and were not repaid, FINRA alleges. HFP also failed to conduct sufficient due diligence on the offering or individuals involved, ignored warning signals, and failed to conduct any due diligence supervising third parties, FINRA notes. While neither admitting nor denying the findings, HFP reportedly consented to the sanctions.

Investment Fraud Lawyers Investigating

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 (1159 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.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.