FINRA Bans Firm and CEO Over Drug Kickback Scheme
The Financial Industry Regulatory Authority (FINRA) announced this week that it has banned New York-based Halcyon Cabot Partners Ltd. and two of its executives over allegations of fraud, kickbacks and more involving a cancer drug development company.
According to the firm’s settlement with FINRA, CEO Michael Morris and chief compliance officer Ronald Heinemann engaged in various illegal schemes in violation of securities law, including hiding private placement fee kickbacks and serving as a false agent for an already expelled broker-dealer and then altering their accounting to hide excessive trading.
Halcyon and the named individuals conspired with Craig Josephsberg, a barred broker-dealer, to conceal an illegal discount provided to venture capital firm Socius Capital Group LLC in a private placement of a cancer drug development company.
In order to carry out the scheme drug company Cell Therapeutics Inc., funneled the private offering directly to Socius rather than actively soliciting buyers. Halcyon Cabot then returned nearly its entire fee through a sham consulting agreement – allowing Cell Therapeutics to conceal the fact that it was selling shares at a discount.
In addition, Morris and Halcyon are alleged to have helped Felix Investments LLC, a now-expelled financial firm, collect commission from both buyers and sellers over some of their transactions, a violation of securities law. Halcyon also was charged with failing to stop Josephsberg’s churning of retail customer accounts.
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The attorneys at Dimond Kaplan & Rothstein, P.A. have helped recover more than $100 million from some of the largest banks and brokerage firms in the world. If you invested with Halcyon or one of the above named individuals, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.