FINRA Charges TriPoint Stockbroker With Unsuitable Recommendations
Mark Harris Elenowitz of New York New York a prior Chief Executive Officer of TriPoint Global Equities has been charged along with the securities broker dealer in a Complaint by Financial Industry Regulatory Authority (FINRA) Department of Enforcement that alleges that Elenowitz made unsuitable investment recommendations to customers as it pertained to private placement offerings. Department of Enforcement v. TriPoint Global Equities et al. Disciplinary Proceeding No. 2017053409201 (May 29, 2020).
According to the Complaint, there was inadequate due diligence conducted by Elenowitz concerning both the issuers of the private placements as well as the principals who created and operated the issuers. The issuers were allegedly in the business of buying and selling concert tickets among other things. The Complaint alleges that there were red flags regarding the issuers’ prospects in addition to the principals’ operations and ability to generate a profit for the issuers. Elenowitz allegedly failed to notice these red flags.
FINRA maintains that $16,000,000.00 had been raised from 42 TriPoint customers including one investor who Elenowitz personally solicited and who made $500,000.00 in purchases. TriPoint purportedly brought in $500,000.00 in fees as placement agent.
The regulator indicated that customers sustained catastrophic losses on the private placements. The Complaint stated that the issuers had been used by its principals as a cover for a Ponzi scheme. FINRA determined that Elenowitz and TriPoint lacked a reasonable foundation to believe that the investments were appropriate for customers since there was no adequate due diligence performed on the issuers and the principals. Department of Enforcement alleges that TriPoint and Elenowitz violated FINRA Rule 2111 and 2020 in this respect.
FINRA also contends that the private placement offerings failed to be supervised by TriPoint and Elenowitz with a view towards complying with FINRA’s suitability rules. The regulator maintained that TriPoint’s written supervisory procedures failed to be enforced as it pertained to the due diligence on private placements. FINRA Department of Enforcement alleges that TriPoint and Elenowitz violated FINRA Rules 2010 and 3110 in this regard.
FINRA Public Disclosure reveals that Elenowitz has been identified in two customer initiated investment related disputes containing allegations of his misconduct while employed by TriPoint. On February 8, 2017, a customer filed an investment related civil action in the United States District Court for the Southern District of New York in which the customer requested $1,500,000.00 in damages based upon allegations of Elenowitz’s failure to undertake due diligence prior to effecting the sale of private placements. The claim also alleges that the amount of commissions from the transactions had been concealed from the customer. Case No. 1-17-876.
An additional customer initiated investment related civil action brought in the United States District Court that involved Elenowitz’s activities was resolved for $400,000.00 in damages founded on accusations of the failure of Elenowitz to conduct due diligence on private placements sold between 2015 and 2016 that caused the customer undue losses. Civil Action No. 1:17-cv-01962 (Oct. 30, 2018).
Elenowitz’s employment with TriPoint Global Equities was terminated as of May 12, 2020. He has been employed by Digital Offering LLC and Cambria Capital LLC since March of 2020.