FINRA Bars Owner of Broker-Dealer, Seller of Illiquid Equipment-Leasing Funds for Misusing Investor Money
The Financial Industry Regulatory Authority has barred the owner of Commonwealth Capital Corp. from the securities industry. Kimberly Springsteen-Abbott is accused of misusing investor funds.
Commonwealth Capital Securities Corp., a wholesaling brokerage firm, packages and distributes illiquid equipment-leasing funds. Springsteen-Abbott is broker-dealer director and the president of the parent company.
According to FINRA, Abbott and her husband charged thousands of dollars of personal spending on the same credit card that they used for business expenses. She would then allocate the investors’ money to cover her own expenses, including an Alaskan cruise, holiday family meals, a trip to Disneyland, holiday décor for her home, clothing, grocery bills, pharmacy expenses, and car rentals. Springsteen-Abbott allegedly tried to hide her misconduct by lying to the self-regulatory organization, which was looking into the allegations, as well as to the FINRA hearing panel about what she did with the money.
The SRO said that her conduct violated the regulator’s rule 2010, which mandates that registered brokerage firms and their reps meet“ high standards of commercial honor and equitable principals of trade” when doing business.
A FINRA panel said that Springsteen-Abbott abused her authority when she improperly allocated the funds to two kinds of expenses that were not related to the business of the funds. FINRA said that she misused money that belonged to the funds’ investors and violated the restrictions in the investments’ offering documents. Her intentional misuse of investor money was to their “detriment.”
Springsteen-Abbott was ordered to pay disgorgement of $209,000 plus interest. She must also pay a $100,000 fine. FINRA’s probe encompasses the period from early 2009 to early 2012.
Springsteen-Abbott, however, disagrees with the panel’s ruling. Commonwealth Capital Corp. sent an email to InvestmentNews saying she believes the FINRA panel made a mistake and she plans to appeal.
In 2013, Springsteen-Abbott settled with the Securities and Exchange Commission for $1.5 million over allegations that a related fund group misled investors about compensation practices at the equipment leasing funds. According to the agency’s cease-and-desist order, Commonwealth Capital Securities Corp. made disclosures that were misleading about the expenses it charged to several equipment leasing funds that Commonwealth Funds’ sponsored. When settling, Springsteen-About and the Commonwealth Income & Growth Fund did not deny or admit to the findings.
Equipment Leasing Funds
These funds let investors pool capital to purchase equipment and become lessors. Investors that become part of equipment leasing fund programs gain the possibility to get predictable, frequently tax-deferred equipment during the equipment’s life or when it is re-leased or sold. Unfortunately, there are risks involved.
Some or all of distributions received could b juste a return of capital. Distribution rates are not necessarily a clear sign of profitable fund returns. Equipment leasing funds are blind pool offerings in which the fund has not identified a specific investment as of the prospectus's date. This means all of the possible risks cannot be determined. Poor economic conditions may hurt the fund, resulting in investor losses. Shares are illiquid.
Our securities fraud law firm is here to help investors get their money back. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
Finra bars owner of B-D that sells equipment-leasing funds, Investment News, April 14, 2015
Read the SEC Order (PDF)
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