A former Miami-based broker is being accused by Finra of defrauding his mostly Venezuelan clients of more than $4.2 million.
Jorge A. Reyes, who worked as a broker with CP Capital Securities Inc. of Miami—a firm that was shut down by Finra in relation to the case last year—allegedly carried out the fraud through the use of three private offerings between 2013 and 2016, according to administrative charges filed by Finra on Tuesday.
Reyes covered up the risk involved with the offerings, failed to perform adequate due diligence on the securities and sold them to clients for whom they were not suitable, including a divorced homemaker with two dependent children, Finra said in the complaint.
He also failed to disclose that the offerings by two of the companies were self-offerings primarily intended to fund the failing CP Capital Securities and its parent company, the complaint said.
The complaint also accused Reyes of using $170,000 invested by one client for his own personal use.
Eighteen customers of CP Capital lost all the money they invested in the offerings, a total of $4.2 million, the agency said.
The complaint noted that Reyes is a native of Venezuela, and at the time of the private offering sales he was responsible for expanding CP Securities' business in Latin America. The majority of his clients were Venezuelan, according to the complaint. "The customers to whom Reyes marketed the offerings were native Spanish speakers, whose English was limited," the complaint said. "The customers relied on Reyes to explain the offerings to them. The customers liked and trusted Reyes."
Reyes, who is no longer registered with Finra, was originally registered in 2000 and hasn't worked in the industry since resigning from CP Capital in January 2017, according to Finra.
The Finra complaint is seeking penalties, including that Reyes be required to disgorge all ill-gotten gains "and/or make full and complete restitution, together with interest."