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, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at (585) 310-5140.

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