Raymond Dickie Adcock, of Cabot Arkansas, also known, at least according to FINRA Public Disclosure Records as Dick Adcock, formerly associated with Regal Securities, Inc., of Glenview Illinois, was barred last month by the Financial Industry Regulatory Authority based upon the admission that he misappropriated $10,000 in customer funds generated by a private placement offering done by an “unregistered investment advisor.”

According to the Financial Industry Regulatory Authority

Adcock misappropriated these funds by drafting a check on the unregistered investment advisors account for cash and then converting these funds to his personal use.

Stockbrokers Soliciting To Invest in Private Placements

To what extent, Mr. Adcock participated in the recommendation for any of his customers to invest in a private placement with an unregistered investment advisor, where these activities took place, or how Mr. Adcock obtained access to the investment advisor’s checkbook remains unclear. However, what is clear is that there is a growing trend of stockbrokers, such as Mr. Adcock. soliciting investors to invest in “hedge funds” or private placements, with registered or unregistered investment advisors, over whom securities regulators often perform little or no oversight.

Because these “investment advisors” are substantially unregulated, and they often co-mingle investor funds in accounts that often fail to provide any transparency or disclosure for investors, these private hedge funds, all to often are operated as Ponzi schemes.

However, as registered representative of Regal Securities, Regal Securities has an absolute duty to supervise all the activities of its registered representatives including those engaged in the solicitation of investor funds to invest in private placements, hedge funds, or Ponzi schemes. Courts and securities arbitration panels, as a general matter, almost routinely find these broker-dealers legally or financially responsible for the approved or unapproved extracurricular, outside business activities of their registered representatives, particularly when it involves their customers.

FINRA Reminds Members

FINRA has reminded its members that a broker dealer must conduct a reasonable investigation into each offering, must maintain supervisory procedures under Rule 3010 that are reasonably designed to ensure that these securities are suitable for particular customers, and retain records documenting both the process and results of its investigation.

Moreover, FINRA has reminded its members that “A firm that engages in Regulation D offerings must have supervisory procedures under Rule 3010 that are reasonably designed to ensure that the firm’s personnel, including its registered representatives engage in an inquiry that is sufficiently rigorous to comply with their legal and regulatory requirements; and do not violate the antifraud provisions of the federal securities laws or FINRA rules in connection with their preparation or distribution of offering documents or sales literature.

Guiliano Law Group

Investors suffering losses or damages from investing in a hedge fund or Ponzi scheme may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.

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