Brian Edward Sanders (CRD #2743309, Registered Principal, Wading River, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $35,000. The firm was also fined $10,000, jointly and severally with Sanders. Arlt was fined $25,000 and suspended from association with any FINRA member in any principal capacity for 60 days. Sanders was suspended from association with any FINRA member in any principal capacity for 10 business days. Without admitting or denying the findings, the firm, Arlt and Sanders consented to the described sanctions and to the entry of findings that the f

irm sold preferred shares of its parent company based on a private placement memorandum (PPM) that contained inaccurate or misleading statements, in that the PPM failed to adequately distinguish between the parent company and the firm, and thus created the impression that the parent company, rather than the firm–its primary asset–was, at that time, regulated by the Securities and Exchange Commission (SEC) and FINRA when, in fact, at no time was the parent company either registered with the SEC or a member of FINRA. The findings stated that the business plan attached to the PPM failed to include the current or past financial information related to the parent company, as well as certain non-financial information, such as the parent company’s products, services, goals and strategies, and thereby failed to provide prospective investors with a sound basis for evaluating the facts with regard to an investment in the parent company. The findings also included that the firm made misrepresentations regarding past performance, and made an exaggerated and unwarranted claim or forecast. FINRA found that the firm, acting through Arlt, represented to the Individual Retirement Account (IRA) custodian that the price of the parent company’s preferred shares had increased in value since their initial issuance without informing the custodian that these valuations were arbitrary. FINRA also found that the firm, acting through Arlt, failed to establish and maintain a reasonable supervisory system to ensure due diligence in connection with the private placement and subsequent sales of the parent company’s preferred shares to the public, and failed to maintain a reasonable system to train and supervise its representatives who solicited and sold the parent company’s preferred shares.