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Regulators Sanction Brokers For Maumee Authority Stamping Sales

On April 29th, 2013, the Ohio Division of Securities entered a final order suspending the Investment Representative and Securities Salesperson License of Eric M. Douglas. The suspension is for 90 days from the date of the Order, which is subject to appeal.

This action is a result of a Notice of Hearing that was filed in 2012 related to the sale of stock by Douglas in Maumee Authority Stamping while he was working for Sandru Financial Group in 2008. The Findings of Fact approved and adopted in the Order include findings that:

  • Douglas admitted that all due diligence on the Maumee Authority Stamping investment was being done by LPL Financial's compliance department, not him personally, and that he never saw the results of their research and had no independent basis on which to assess the suitability of the investment.
  • Witnesses testified that Douglas told them the Maumee investment was beneficial, a very good investment that was going to take off like crazy and that investors would make so much money they would not have time to spend it.

The Ohio regulators found that Douglas engaged in manipulative and deceptive acts when he recommended the Maumee investment to investors without performing or having access to proper due diligence on the terms of the deal. They further found that as a trusted fiduciary and adviser to his clients, Douglas had a duty to protect his client's funds and inform their interest in the purchase of Maumee stock. Here is a link to the Ohio Division of Securities Order.

FINRA records indicate that Douglas is not currently registered and that he worked for the following broker dealers in Perrysburg, Ohio, during the dates indicated:

  • Cambridge Investment Research, Inc. 07/2009-07/2012
  • LPL Financial Corporation 04/2008-07/2009
  • Ameritas Investment Corp. 03/2005-04/2008

Richard P. Sandru who ran Sandru Financial Group is the subject of a Securities and Exchange Commission cease and desist order for misappropriating client investment advisory funds. FINRA records indicate that several clients have brought actions against Sandru for losses in Maumee Authority Stamping. Sandru is not currently registered with FINRA.

Mark A. Pantenburg, who is not currently registered with FINRA, worked with Sandru and Douglas at Sandru Financial, received a 60 day suspension by Ohio regulators in December 2012, as a result of the sale of an interest in the Maumee investment. Here is a link to the Ohio Divison's order.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.