The SEC on Monday sustained FINRA’s core disciplinary findings against former Texas broker-dealer Titan Securities and its sole owner, Brad C. Brooks, while setting aside two other counts in a split opinion reviewing discipline tied to a 2012 private placement.
The Commission upheld the $50,000 joint fine, Brooks’s one-year suspension in all principal and supervisory capacities, and a requirement that he requalify as a principal by examination. It set aside FINRA’s findings on approximately 100 allegedly unpreserved emails and on the firm’s alleged failure to supervise a registered representative’s outside business activity.
The case stems from Titan’s role as managing broker-dealer for a best-efforts offering of units in Evolution Partners II, LTD. The offering required a $1 million minimum, but had raised only $300,000 by late October 2012. Evolution’s general partner, of which Brooks owned 56%, borrowed $1.6 million, bought units, and the next day Titan released all funds from escrow, despite the private placement memorandum stating that affiliate purchases would not count toward the minimum.
The SEC found the offering documents were “not ambiguous” and that Brooks knew of the restriction when he broke escrow. The Commission also noted Brooks had previously settled similar FINRA charges involving other contingency offerings, a factor it cited in sustaining the sanctions as remedial rather than excessive.
