FINRA Can't Pin $12.5M Promissory Note Fraud On Brokerage

Law360 (May 22, 2020, 4:24 PM EDT) -- A three-member Financial Industry Regulatory Authority panel chucked an enforcement action accusing a brokerage firm and its principals of fraudulently selling $12.5 million in promissory notes to prop up a struggling real estate investment business, finding on Thursday that the regulator was short on evidence.

In what appears to be a rare loss for FINRA, Shopoff Securities Inc., led by brothers and co-respondents William and Stephen Shopoff, escaped all claims of federal securities fraud and regulatory rule violations.

FINRA's enforcement department had claimed that the Shopoffs misled 29 friends and family members who bought millions of dollars' worth of promissory notes...

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