Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, June 1, 2012

FINRA Suspends Provident Principals for Two Years for Role in Ponzi Scheme

Are $50,000 fines and two-year suspensions from the industry meaningful sanctions for two principals of Provident Asset Management, LLLC, which marketed and sold preferred stock interests in a series of 23 private placements offered by an affiliate?  The offerings, as many will recall, were in fact a big ponzi scheme that raised over $458 million from at least 7,700 investors.  The order of settlement between FINRA and Coughlin and Harrison, which is posted on the FINRA website, is criticized by some as a "slap on the wrist."  Others point out that as a practical matter the two men are barred from the industry, as neither has worked in the industry since 2009, when the fraud was discovered.  As an SRO, moreover, FINRA is not permitted to "punish" wrongdoers, but only impose remedial sanctions, although the distinction is unclear.  For more on this story, see InvNews, Finra's settlement with ex-Provident execs 'slap on the wrist,' says lawyer

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