May 12, 2021
Dalmore Group LLC, a brokerage firm headquartered in Woodmere, New York, recently consented to sanctions imposed by the Financial Industry Regulatory Authority (FINRA) Department of Enforcement to resolve alleged violations of securities industry rules. Dalmore has approximately 40 registered representatives in three branches and it line of business mainly deals with private placements.
FINRA Department of Enforcement alleges in the AWC that between March 2017 and December 2018, Dalmore failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to detect due diligence obligations concerning any private placement offerings that it recommends and sells to its customers. Dalmore’s supervisory procedures required the firm to review several areas related to the private offerings before making them available to customers. According to the AWC, Dalmore failed to conduct an independent investigation to review the issuer’s business plans or models, prospects for the industry, and other details. Instead, the firm relied almost exclusively on information and documentation provided by the issuers. For example, if the firm had conducted its own investigation of one offering, it would have discovered that a key director and officer of the issuer was the subject of securities-related litigation. Based on the foregoing, Dalmore violated FINRA Rules 3110 and 2010.
FINRA Department of Enforcement also claims that Dalmore violated FINRA Rule 5123 and 2010 by failing to file their private placement memorandums in a timely manner between April 2017 and February 2019. Dalmore consented to a censure and $40,000 fine to resolve allegations made against it, without admitting or denying any wrongdoing.
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