Salas Wang LLC is launching an investigation into Rainmaker Securities LLC. According to a recent disciplinary action by the Financial Industry Regulatory Authority (FINRA), Rainmaker Securities failed to perform adequate due diligence on several unregistered private placement securities offerings.
What FINRA Found
According to the FINRA disciplinary action, Rainmaker Securities marketed and sold the following unregistered private placement offerings during the 2011 period:
- Buttonwood Social Network Fund LLC (the "Facebook Fund")
- Eudora Global LLC
- The Incubation Factory Technology Fund, LLC (TIF Fund)
- The Idea Fund LLC (IDEA Fund)
"In connection with the marketing and sale of the 2011 Offerings, the Firm's WSPs required Rainmaker and Anderson to 'perform adequate due diligence,' including obtaining 'sufficient information regarding…the issuer in order to be able to make any needed suitability determinations.' The Firm's WSPs further provided Minimum Due Diligence Guidelines that, among other things, required the Firm to: (i) question or assess the reasonableness of any assumptions underlying the issuer's projections; (ii) review the issuer's material agreements; (iii) inquire about the existence and status of any litigation involving the issuer; and (iv) review any public filings regarding the issuer."
The Violations
With respect to each of the 2011 Offerings, Rainmaker — acting by and through Anderson — failed to enforce its own Written Supervisory Procedures (WSPs). Specifically:
- Failed to evidence that adequate due diligence was conducted
- Failed to complete and maintain a Private Placement Compliance Checklist for three of the four offerings
- Violated NASD Rule 3010(b) and FINRA Rule 2010
How to Recover Your Losses
If you are an investor who lost money investing with Rainmaker Securities or in any of these private placement products, you may be able to recover your losses through FINRA arbitration or securities litigation. Contact Jeff Salas at 312.803.4963 or through the contact form for a free consultation.