Azim Nakhooda, a former broker with La Vista, Nebraska based Securities America, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he sent emails to Securities America customers in connection with their purchases of units in the IMH Secured Loan Fund (IMH) and Medical Provider Funding Corporation V (Med Cap V) promissory notes that contained false and misleading statements, including material misrepresentations regarding the liquidity and safety of IMH and the safety of Med Cap V notes. FINRA said that Mr. Nakhooda's statements to customers relating to the IMH's liquidity directly contradicted the disclosures in IMH's private placement memorandum (PPM) about the illiquidity of IMH and the significant limitations on redemptions. Mr. Nakhooda's statements regarding the safety of IMH also directly contradicted the disclosures of significant risks in IMH's PPM. Mr. Nakhooda, of Chagrin Falls, Ohio, was fined $50,000 and suspended from association with any FINRA member in any capacity for nine months - the suspension is in effect from March 18, 2013 through December 17, 2013.
Mr. Nakhooda's representations to the customers regarding the liquidity and safety of IMH and the principal protection afforded by the Med Cap V notes were false and misleading. FINRA said that the Med Cap V notes executive summary that Mr. Nakhooda emailed stated that the notes provided principal protection, which was directly contrary to disclosures in Med Cap V's PPM about the potential risks to principal. FINRA also found that Mr. Nakhooda sent the Med Cap V note's executive summary to customers who did not purchase the notes. FINRA also said that the IMH executive summary that Mr. Nakhooda emailed stated that IMH was completely liquid after 60 days or completely liquid after 90 days, which were false statements. Other statements in IMH's executive summary exaggerated the safety of the fund in light of the risks presented by the fund's PPM. Consequently, Mr. Nakhooda's representations to customers regarding the safety of the fund were misleading.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. In this case, Securities America should have overseen and prevented Mr. Nakhooda's communications, which omitted any discussion of the significant risks associated with an investment in IMH and Med Cap V. As a result, investors who have suffered damages due to Mr. Nakhooda's false and misleading communications can bring forth claims to recover losses against Securities America, which should have prevented Mr. Nakhooda from committing the described prohibited acts. Have you suffered losses in your Securities America, Inc. account due to private placements or any other investments your broker sold you? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
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