FINRA Bars Consulting Services Chief Executive Officer For Fraud
Eric Steven Smith of Troy Michigan the founder and Chief Executive Officer of Consulting Services Support Corporation (the parent company of CSSC Brokerage Services Inc.) has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to a FINRA National Adjudicatory Council Decision containing findings that misrepresentations had been made by Smith in securities offering documents provided to CSSC Brokerage Services customers. In the Matter of Department of Enforcement Decision No. 2015043646501 (Sept. 18, 2020).
According to the Decision, CSSC Brokerage Services investors were defrauded by Smith through his offer and sale of securities via a bridge loan offering which was meant to keep CSSC Brokerage Services’ parent company afloat. The Decision revealed that the parent company had mounting debts, failed deals and big business losses at the time of this bridge loan offering. Smith knew about the precarious state of the parent but he chose to lie to investors about this within the offering documents.
FINRA indicated that misrepresentations and omissions were made by Smith so that investors would not know about the company’s ability to pay $3,000,000.00 owed to investors. The stockbroker did not let investors know about the parent company’s earnings and what it was due to receive through a special purpose bank that did not produce revenue.
The Decision also noted that a revenue event was touted by Smith as a way of inducing investors. The event never took place because it did not exist. Investors were also told that the City of Jacksonville would bring in approximately $1,000,000,000.00 in assets under management for CSSC. FINRA determined that Smith lacked any foundation for uttering these misleading and false statements within offering documents. Smith’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5 and FINRA Rules 2010.
The Decision also noted that Smith engaged in activities which required him to register with FINRA. The regulator pointed to Smith’s unauthorized solicitation of customers’ investments for purposes of purchasing private placements in the parent company.
Since January 1998, Smith has been Chairman and CEO of Consulting Services Support Corporation and an investment advisory representative of CSSC Investment Advisory Services. He has also been registered as an investment advisory representative of Trustee Empowerment Protection inc. since April of 2010.