The Financial Industry Regulatory Authority (FINRA), the largest independent regulatory authority in the US, has filed a series of complaints alleging that Lawson Financial Corporation and its Chief Executive Officer (CEO) manipulated bond sales and securities fraud, per a recent FINRA statement.
The new world of online trading, fintech and marketing – register now for the Finance Magnates Tel Aviv Conference, June 29th 2016.
Lawson Financial Corporation, Inc. (LFC) is an Arizona-based group that deals with charitable donations and trust account management. The group regularly deals with the sale of upwards of millions of dollars in municipal revenue bonds to a multitude of clients in the United States.
However, FINRA has issued a formal complaint against the group, as well as Robert Lawson, the company’s CEO and president with self-dealing – furthermore the regulator has charged LFC with abuse and securities fraud given their role as co-trustees of a charitable remainder trust. In particular, LFC and Lawson were improperly using the trust funds to indirectly prop up the struggling offerings via transfers of millions of dollars from the charitable remainder trust account – the allegations also extend to Pamela Lawson, LFC’s Chief Operating Officer (COO).
Filling the Gap Between Brokers, LPs, and ClientsGo to article >>
The specific municipal bonds at issue in the cited complaint include a $10.5 million bond offering back in October 2014 for bonds relating to an Arizona charter school – this was underwritten by LFC and peddled to LFC customers. In addition, LFC had also been involved in secondary market bond sales to its clientele in 2015, involving earlier-issued municipal revenue bonds to the same charter school. Finally, the complaint details secondary market sales to LFC’s customers between early 2013 and July 2015, concerning two separate assisted living facilities in Alabama.
FINRA has alleged that Lawson and LFC were acutely aware of the financial difficulties faced by the municipal revenue bond conduit borrowers, i.e. the Arizona charter school and the assisted living centers, opting to mask the financial woes facing these groups to its customers. This was further compounded by allegations that Lawson and LFC carried out their securities fraud by transferring millions of dollars from a deceased customer’s charitable trust account to cover up any associated risks endemic in the municipal revenue bonds.
Consequently, Lawson and his wife and company COO, Pamela Lawson, were unable to pay their operating expenses, nor was LFC able to reconcile the required interest payments on the bonds.
Per FINRA’s protocol, Lawson will be able to file a response and hearing in his defense before any formal charges can be made – in this instance it’s likely that any concrete evidence of wrongdoing and fraud based on the aforementioned complain could result in fines for damages, censure, suspension, or bar from the securities industry.
Earlier this week, FINRA made headlines after it fined Raymond James & Associates (RJA) and Raymond James Financial Services (RJFS) for $17 million given their failures associated with the firms’ anti-money laundering (AML) programs.