Blum Holdings Inc (BLMH)

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•ARTICLE• Is FINRA now targeting TRTC?


Couldn't help but "LOL" at recent comments like "FINRA CANNOT target companies!"

Fact is - insofar as penny stocks are concerned - FINRA DOES indeed head up the initial investigations with respect to companies like TRTC (not sure? Just see PHOT). Moreover, FINRA DOES indeed have the ability to suspend trading of OTC stocks, and in some ways FINRA's power in this regard exceeds that of the SEC itself (FINRA can suspend trading for longer and for less). In reality - again, insofar as penny stocks are concerned - FINRA is actually on the front line and provides support directly to the SEC for investigative purposes.

Most of us already understand this, but FINRA can and does target companies - ESPECIALLY PENNY STOCKS.

The red flags surrounding the TRTC story are becoming more and more startling.

Be careful folks: Don't get trapped...and be wary of fabricated hype.

FINRA suspended former Arque Capital, Ltd (Irvine, CA) broker Michael "Mike" Alexander Nahass and fined him $15,000 for engaging in undisclosed outside business activities from 2009 through 2015 while associated with three FINRA-member firms in Southern California. The suspension also includes admonishment for failing to disclose an outside securities account and for submitting false answers on annual compliance questionnaires.

FINRA AWC #2015044765401

According to the report, Nahass began engaging in an outside business activity by serving as director and officer of a publicly traded company without notifying his employing firms during the relevant period from 2009-15. During this time, Nahass was registered with FINRA firms Purshe Kaplan Sterling Investments (Beverly Hills, CA) until June 2010, Newbridge Securities Corporation (Beverly Hills, CA) in the summer of 2010, and Arque Capital from 2010 through March 2015.

Nahass' profile on the Terra Tech Corp. (TRTC) Board of Directors website indicates he is Terra Tech's Director, Secretary & Treasurer, having previously served as Chief Portfolio Manager at NMS Platinum Funds, LLC and Managing Director/COO of NMS Capital Asset Management, Inc.

FINRA's investigation states that on multiple occasions, Nahass failed to provide prompt written notification to the firms he was associated with at the time that he was engaged in an outside business activity with TRTC; the findings state that Nahass received compensation from Terra Tech, a hydroponic equipment and indoor agriculture company, totaling about $1.275 million.

The report indicates Nahass also failed to disclose to Arque that while working at that firm, he opened an outside brokerage account with a different FINRA member firm in which he held and sold Terra Tech company shares.

The AWC concludes with the finding that Nahass submitted inaccurate annual compliance questionnaires in which he made false representations that he did not maintain any outside brokerage accounts and that he was not involved with an outside business activity, even though he purportedly knew he had served as Terra Tech director.

If you have invested with Michael Alexander Nahass or with any other broker or financial adviser whose failure to adequately disclose outside business activities or similar compensation/profit-generating activities that could serve as a conflict of interest when it comes to your own investments, and such disclosure failures or misrepresentations have proven harmful to your investments or interests, please call The Law Offices of..."

http://www.stocklaw.com/Securities-Fraud-Blog/2016/January/Michael-Nahass-Fined-Suspended-for-Undisclosed-O.aspx?Mobile=false

FINRA's principal job is to regulate its own members, who are securities firms and the people who work for them. It does, however, have a fraud division that often takes a look at questionable penny stocks. Since FINRA is able to track trading better than the SEC, it often picks up on unusual activity, especially the huge increases in actual and dollar volume that accompany major promotions. It may call the company to ask whether it has any involvement in the promo, or whether insiders have been selling. Naturally the company offers a categorical denial. Outsiders have no way of knowing whether FINRA finds those denials plausible.
Recently there's been a new and interesting development. Eco-Trade Corporation (BOPT) was the subject of a Stock Market Authority promotion. Once the promo had been underway for a few days, FINRA halted trading unexpectedly, in the middle of the session, by invoking Rule 6440. Rule 6440 provides that this may be done “if FINRA determines that an extraordinary event has occurred or is ongoing that has had a material effect on the market for the OTC Equity Security... or has the potential to cause major disruption to the marketplace or significant uncertainty in the settlement and clearance process.”
For observers, the most extraordinary event was that it happened at all. More than two weeks later—unlike the SEC, FINRA can extend its ten day halts successively, if it wants—BOPT is still not trading, and no explanation for the action has been provided. It is unclear whether FINRA reacted to a genuinely anomalous situation, or whether it's experimenting with a new way to deal with out of control promotions.
What this means for penny stock players

The lesson to be learned from all this is that the SEC, and sometimes FINRA, can and will move against penny companies with vigor. Lawsuits resulting in civil or criminal actions after years of investigation do not pose a threat to short-term traders looking for a quick profit.
Suspensions and halts, however, are different animals. They happen without even a moment's notice, and once they do, anyone holding the stock is likely to suffer serious losses.
Penny stocks are almost never investment quality. The possibility of fraud is always present. Experienced traders know to take profits early and often; the tantalizing ten-bagger is far more elusive than the bag players end up holding when caught in a suspension or halt.

See also http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=4414.