Timothy Burke Ruggiero and Peter Shawn Chung, both with Brookshire Securities Corporation, have been named in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly assisting private companies in going public by reverse mortgages with publicly held shell corporations. FINRA is asserting that Mr. Ruggiero and Mr. Chung entered securities purchases and limit orders that manipulated the price of two stocks during the period of a private investment in public equity (PIPE) offering for the over-the-counter (OTC) securities. The complaint states that because Mr. Ruggiero and Mr. Chung controlled the member firm that was the placement agent for the PIPE offering, they would benefit from placement agent fees, stock, and warrants if the PIPE was successful. Mr. Ruggiero's and Mr. Chung's orders and purchases artificially created increases in the inside bid price for a stock, which sent generated false or misleading signals to prospective investors, who thought that the market placed a higher value on the stock - as the firms CEO, Mr. Ruggiero was responsible for the firm's role in processing and submitting these orders. This scheme influenced investors into purchasing shares at an artificially increased price through the PIPE offering.
FINRA's complaint also alleges that Mr. Ruggiero and Mr. Chung violated SEC Regulation M by soliciting limit orders and processing stock purchases firm personnel solicited for two PIPE offerings during the period when distribution participants in a securities offering were prohibited from trading that security. In addition, the complaint alleges that Mr. Ruggiero failed to make and preserve records of electronic communications relating to his firm's business and to make note of his review of emails. Mr. Ruggiero failed to assure his firm installed and employed email systems that captured and preserved firm communications, and he failed to ensure that the firm employed a non-erasable and non-rewritable format to retain email correspondence. Furthermore, Brookshire Securities' written procedures on electronic correspondence required prior approval for electronic messages, review of incoming email before delivery, and a principal's review and written endorsement of all correspondence of associated persons related to securities transactions.
On top of all this, FINRA alleged in its complaint that Mr. Ruggiero failed to supervise trading at the firm - he failed to appropriately review and approve transactions and trading activities in order to prevent the firm and its registered representatives from improperly soliciting and purchasing limit orders during restricted offering periods, and he failed to supervise electronic communications at the firm. Mr. Ruggiero also forged options order tickets with a retired senior registered options principal's (SROP) signature to evidence the SROP's review of the records - Mr. Ruggiero filed a Form U4 to reflect the SROP's return to work from retirement.
Have you suffered damages resulting from illegal activity at Brookshire Securities Corporation? 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.