Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, McDonald Partners LLC (CRD # 135414) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to conduct reasonable due diligence on private placement offering.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding McDonald Partners LLC
Registration Background for McDonald Partners LLC
McDonald Partners LLC has been a member firm of FINRA since 2005. It is headquartered in Cleveland, OH. It is a broker-dealer that operates out of five branch offices with approximately 45 registered representatives.
FINRA’s Allegations Against McDonald Partners LLC
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated June 22, 2022 (No. 2019060692401), McDonald Partners LLC consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “In May 2019, [McDonald Partners LLC] approved a private-placement offering to its customers without having first conducted reasonable due diligence of the offering, its terms, and the potential risks it presented to investors”;
- “[I]n March 2019, the firm approved private-placement sales in a cannabis company, Company A”;
- “[McDonald Partners LLC] was introduced to this opportunity by Individual 1, one of the firm’s former registered representatives, who was also one of Company A’s four co-founders”;
- “During the due diligence process, [McDonald Partners LLC] identified several significant concerns about Company A’s future business prospects, including that the company’s management team lacked experience in the cannabis industry and had provided unrealistic capital-raising and revenue projections in the offering documents”;
- “The firm documented these and other concerns in various internal memoranda and its Investment Committee recommended that [McDonald Partners LLC] decline to sell interests in Company A to the firm’s customers”;
- “The firm then reversed itself and approved the private-placement offering but never recommended that any of its customers purchase interests in that offering”;
- “In April 2019, Individual 1 introduced [McDonald Partners LLC] to a second private placement (the Offering) in an investment fund (the Issuer) that was formed for the primary purpose of investing in Company A”;
- “[McDonald Partners LLC] failed to conduct reasonable due diligence of the Offering. The firm only reviewed the limited documents and information that the Issuer provided. It did not verify that the Issuer had purchased convertible debt from Company A”; and
- By virtue of its actions, McDonald Partners LLC violated FINRA Rule 3110 regarding supervision and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA Sanctions McDonald Partners LLC
As a result of such violations and in addition to the above-described findings and conclusions, FINRA’s June 22, 2022 AWC also indicates that McDonald Partners LLC consented to the following sanction(s):
- A censure;
- A fine in the amount of $100,000.00;
- Partial restitution in the amount of $170,000.00; and
- Written certification that it will not resume sales of private-placement offerings unless and until it has implemented supervisory systems and written supervisory procedures for due diligence on private placement offerings that are reasonably designed to achieve compliance with the Exchange Act and FINRA rules.
McDonald Partners LLC Has A History of Customer Complaints
In addition to McDonald Partners LLC being sanctioned by FINRA after an investigation into its failure to conduct reasonable due diligence on private placement offering, FINRA BrokerCheck for McDonald Partners LLC reveals it has a prior history of customer-initiated complaints and/or arbitrations, including but not necessarily limited to the following:
- On February 12, 2019 a customer initiated an arbitration naming McDonald Partners LLC as a respondent. The customer alleged breach of fiduciary duty, fraud, breach of contract and negligence. The customer also alleged damages in the amount of $600,000.00. On October 12, 2021, the arbitration panel issued an award in favor of the customer in the amount of $160,000.00.
If you or someone you know has or had a brokerage account with McDonald Partners LLC and have concerns regarding losses in your investments or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.