Securities Arbitration Lawyer Blog
FINRA has suspended Fusion Analytics Securities, LLC’s former Chief Compliance Officer Luis Fernando Restrepo from the securities industry for a six-month period over compliance and supervisory failures related to, among other things, the sale of private placements. Mr. Restrepo consented to a six-month suspension from associating with any FINRA member in all principal capacities and will have to requalify as a principal prior to acting in that capacity with any FINRA member.
During his association with Fusion, Mr. Restrepo was the firm’s Chief Compliance Officer (CCO) and Anti-Money Laundering Compliance Officer (AMLCO).
Mr. Restrepo’s suspension is scheduled to begin on August 2, 2021, and end on February 1, 2022.
If you have lost money with Fusion Analytics Securities, LLC, contact investment fraud lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
FINRA Letter of Acceptance, Waiver, and Consent No. 2016047624501
Luis Fernando Restrepo and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on July 20, 2021.
The AWC, which indicates that the matter originated from FINRA’s 2016 and 2018 cycle exams of Fusion, alleges the following violations:
- From April 2016, through March 2018, in his capacity as Fusion’s AMLCO, Mr. Restrepo failed to reasonably establish and implement (i) an anti-money laundering (AML) compliance program reasonably designed to detect and cause the reporting of suspicious activity and (ii) a reasonably designed Customer Identification Program (CIP).
- For the calendar year 2016, Mr. Restrepo also failed to ensure that the firm conducted an annual independent test of its AML program.
- During the period April 2016 through March 2018, Mr. Restrepo also failed to reasonably establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with Section 5 of the Securities Act of 1933.
- Mr. Restrepo was the principal responsible for supervising private placements and reviewing correspondence. During the period of January 2017 until June 2018, Mr. Restrepo failed to reasonably supervise two private placements sold by Fusion in which Fusion failed to conduct and document reasonable investigations of the offerings and their issuers before recommending those securities to its customers. In addition, in connection with one of the private placements, two registered representatives who were associated with Fusion employed, used, and made materially misleading statements in the sale of private placements. These registered representatives also relied on, and distributed sales materials that were not balanced and that failed to disclose the risks associated with the investments.
- Mr. Restrepo was aware of multiple red flags of potential misrepresentations in offering materials distributed by the two Fusion representatives but did not reasonably investigate those red flags or otherwise take meaningful action to stop the misconduct.
Private Placements
FINRA Regulatory Notice 10-22 (Reg. Notice 10-22) indicates that firms have an obligation to conduct a reasonable investigation of the issuers and the securities they recommend.
Firms must have supervisory procedures that are reasonably designed to ensure, among other things, that the firm’s personnel engage in an inquiry of a private placement that is sufficiently rigorous and that each private placement is properly supervised. To ensure that it has fulfilled its suitability responsibilities, a broker-dealer in a Regulation D offering should, at a minimum, conduct a reasonable investigation concerning: 1) the issuer and its management; 2) the business prospects of the issuer; 3) the assets held by or to be acquired by the issuer; 4) the claims being made; and 5) the intended use of proceeds of the offering.
Reg. Notice 10-22 also indicates that in the course of a reasonable investigation, a broker-dealer must note any information that it encounters that could be considered a “red flag” that would alert a prudent person to conduct further inquiry. A broker-dealer’s reasonable investigation responsibilities would obligate it to follow up on any red flags that it encounters during its inquiry, as well as to investigate any substantial adverse information about the issuer. Reg. Notice 10-22 states that, when presented with red flags, the broker-dealer “must do more than simply rely upon representations by issuer’s management, the disclosure in an offering document or even a due diligence report of issuer’s counsel.”
In addition, the firm should retain records documenting both the process and results of the investigation. A firm’s failure to conduct a reasonable investigation regarding the suitability of a Regulation D offering is a violation of FINRA Rules 3110 and 2010.
Often, a firm’s written supervisory procedures (“WSPs”) will also designate the person responsible for remedying deficiencies in compliance by associated persons, reviewing correspondence, reviewing and approving retail communications, and supervising the firm’s record-keeping and reporting, among other supervisory responsibilities.
To learn more about private placements, click here.
Luis Fernando Restrepo (CRD#: 2167380)
Mr. Restrepo has 24 years of experience in the securities industry. He was registered with Fusion Analytics Securities, LLC in Coral Springs, FL, between April 2016 and October 2018.
Mr. Restrepo was most recently registered with Camden Financial Services in Keller, TX, between March and December 2020.
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Fusion Analytics Securities, LLC, contact investment fraud lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.