Although National Securities is closing, it appears to be a merger with B. Riley. The company bought a large stake in the parent company, National Holdings Corporation in 2018. In 2021, B. Riley purchased the remaining shares. The resulting merger has 900 representatives and $29 billion in client assets.
FINRA Sanctions National Securities Corporation
On June 23, 2022, FINRA issued sanctions against National Securities Corporation totaling $9 million that includes:
- Disgorgement of $4.77 million
- Restitution of $625,000 to customers who purchased private placements
- Fines of $3.6 million for misconduct, operational and supervisory violations
The complaint is centered on ten public offerings that the company tried artificially influencing the market for to promote them. From June 2016 through December 2018, NSC attempted to entice several customers to purchase stock “in the aftermarket of the offerings prior to their completion.” The action is a violation of Rule 101 of Regulation M under the Securities Exchange Act of 1934.
National Securities withheld material information from the customers who purchased these private placements. The firm also failed to notify clients that GPB Capital Holdings was unable to file their audited financial statements on time for the placements.
The firm’s activity was intended to manipulate the market to support the price and stimulate demand for the securities in the aftermarket. The FINRA complaint contained additional related allegations of misconduct by National Securities.
The firm settled these issues with FINRA prior to the firm’s closure and before the final buyout by B. Riley Wealth Management.
The Securities Exchange Act of 1934
This act authorized and created the Securities and Exchange Commission, leading the way for an overseeing agency for the financial markets. Any companies listed on any US stock exchange are required to follow the requirements set forth by the SEC. These requirements are intended to ensure that the markets are fair and instill investor confidence. This law is also called the “truth in securities law.”
The law’s objectives are that potential investors receive financial and other significant information about the securities they are considering for purchase. Additionally, the law forbids any type of dishonesty and fraud in the sale of securities.
Subsequent laws passed after this one addressed other many specific issues relevant to the SEC and The Securities Exchange Act of 1934. This includes the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which also created the SEC’s Office of the Whistleblower.
Did You Invest With National Securities Corporation?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.