FINRA’s Department of Enforcement investigated Josephberg and discovered various forms of misconduct and securities fraud. First, FINRA alleged that in late May 2012, Josephberg introduced Halcyon and two of its principals to an institutional investor to be the placement agent for the investor’s investment in another company. According to FINRA, the parties entered into a fraudulent scheme with the institutional investor to secretly “kick back” nearly five percent of the investment and misrepresent to investors the actual price the institutional investor paid for the shares.
In addition to this fraudulent scheme, FINRA also alleged Josephberg executed two unauthorized purchases on behalf of Halcyon customers of a penny stock issued by VHGI Holdings, lnc. (“VHGI”). According to FINRA, VHGI was in dire financial straits, and received a bridge loan from one of Halcyon’s principals. To make matters worse, FINRA contends Josephberg, with the assistance of principals and agents of Halcyon, engaged in excessive trading in two of the firm’s customers’ accounts between June 2011 and March 2013. Finally, FINRA alleged, Josephberg executed at least 10 unauthorized trades of stock, in addition to the VHGI trades, in the accounts of five customers between February 2011 and November 2012.
Based upon the foregoing alleged misconduct, FINRA asserted Josephberg violated various federal and state securities laws, including FINRA Rules 2010, 2020, 2111, 4511; NASD Conduct Rules 2310 and 3110; as well as Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. Specifically, Section 10b-5, provides that in connection with the purchase or sale of any security, “[i]t shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange … to employ any device, scheme or artifice to defraud…”
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered losses as a result of investing with Josephberg through Halcyon, or if you believe that you have been a victim of securities and investment fraud including falsified documents, please complete our contact form or contact one of our attorneys at (800) 627-2179.