Cabot Lodge Securities LLC – Brokerage Firm Sanctioned by FINRA | Goodman & Nekvasil P.A. May Recover Investor Losses
According to the Order Accepting Offer of Settlement:
From August 2012 to February 2016 (the “Relevant Period”), Cabot Lodge Securities LLC (“Cabot Lodge” or the “Firm”) participated in an initial public offering (“IPO”) of a nontraded real estate investment trust (the “REIT”) in which the amount of organization and offering expenses (“O&O”) exceeded fair and reasonable limits, and compensation to Cabot Lodge representatives was not disclosed. These failures resulted largely from the Firm’s failure to supervise its underwriting and sales of the REIT, which was its main product during the Relevant Period.
The Firm also made an unsuitable recommendation to an elderly customer. Cabot Lodge sought to become dealer manager for the REIT’s IPO nine months after it launched. At that time, O&O expenses well exceeded reasonable limits under FINRA Rules, and Cabot Lodge submitted a plan to FINRA to address them. However, Firm personnel ignored 3 their duty under the plan and FINRA Rules to adopt controls and to monitor O&O expenses. The amount of overall O&O expenses well exceeded 15 percent of the gross offering proceeds, and the underwriting compensation portion of the O&O expenses well exceeded 10 percent of the gross offering proceeds excluding securities purchased through the reinvestment of distributions.
As a result, Cabot Lodge participated in a public offering in which the O&O expenses were not fair and reasonable in violation of FINRA Rules 2310(b)(4) and 2010. In addition, Cabot Lodge participated in the IPO even though restricted shares of the REIT’s common stock awarded to persons related to the Firm were not disclosed in certain offering prospectuses as items of underwriting compensation, and the Firm did not have reasonable grounds to believe that such items were disclosed, in violation of FINRA Rules 5110(c), 2310(b)(3), and 2010.
These violations resulted from Cabot Lodge’s failure to establish, maintain and enforce a supervisory system, including written procedures, reasonably designed to achieve compliance with FINRA Rules 5110 and 2310, in violation of FINRA Rules 3110(a) and (b) and 2010, and NASD Rule 3010(a) and (b).
Finally, in violation of FINRA Rules 2111(a) and 2010, Cabot Lodge did not have a reasonable basis to believe that its January 2016 recommendation that an elderly customer invest in the REIT was suitable based upon his investment profile.
Investors with Cabot Lodge Securities LLC May Recover their Losses with Goodman & Nekvasil, P.A.
If you invested with Cabot Lodge Securities LLC, Goodman & Nekvasil, P.A. may help you. Goodman & Nekvasil, P.A., a St. Petersburg, FL law firm with a national practice representing victimized investors, has recovered more than $200 million dollars on behalf of victimized investors.
All our cases are handled on a purely contingency fee basis by Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA. Kalju Nekvasil, Esq. has practiced in this area of the law for more than 35 years.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
If you incurred investment losses with Cabot Lodge Securities LLC and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.