FINRA Fines Oak Hills Securities for Private Placement Misconduct
From the desk of Jim Eccleston at 蘑菇传媒
The Financial Industry Regulatory Authority (FINRA) has censured and fined Oak Hills Securities Inc., an Oklahoma City brokerage, for multiple rule violations over five years. AltsWire reports that the firm handled seven private placements between September 2019 and June 2024, primarily involving Oklahoma tax credit direct participation programs.
According to AltsWire, FINRA found that Oak Hills engaged in three areas of misconduct. First, the firm reduced minimum offering contingencies without returning investor funds as required. In four of the seven offerings, Oak Hills failed to meet even the reduced minimums but continued accepting subscriptions and closing the offerings. This conduct violated Section 10(b) of the Securities Exchange Act, Rule 10b-9, and FINRA Rule 2010. FINRA had previously warned Oak Hills about similar conduct in 2014.
Second, in six offerings between September 2019 and December 2020, Oak Hills deposited investor funds into a bank account controlled by the issuer rather than a separate escrow account at an unaffiliated bank, as required by Section 15(c)(2) of the Exchange Act and Rule 15c2-4. Although no investors reported losses, the practice violated regulatory standards because the firm’s net capital was under $250,000.
Third, Oak Hills filed required documents for two offerings 61 and 153 days late, breaching FINRA Rule 5123 and Rule 2010. FINRA had previously addressed late filings by the firm in 2014.
Oak Hills agreed to a censure and a $125,000 fine in an Acceptance, Waiver, and Consent (AWC), resolving the matter without admitting or denying the findings. AltsWire reports that the firm also acknowledged that its willful violations of Section 10(b) and Rule 10b-9 could trigger statutory disqualification from FINRA membership and waived its right to appeal the sanctions.
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