Corporate & Securities Law

Pacific Cornerstone, Former CEO Latest To Face Disciplinary Actions Over Private Placements

By Mark Maddox

News of private placement deals run amuck keeps coming. The latest concerns private placement offerings - also known as Regulation Ds - involving Pacific Cornerstone Capital and former CEO Terry Roussel. The two were fined $750,000 in December by the Financial Industry Regulatory Authority (FINRA) for making misleading statements and, in some instances, omitting facts in connection to sales of two private placement deals: Cornerstone Industrial Properties LLC and CIP Leveraged Fund Advisors LLC.

FINRA also charged Pacific Cornerstone and Roussel with advertising violations and supervisory failures.

Cornerstone Industrial Properties and CIP Leveraged Fund Advisors were affiliated businesses of California-based Pacific Cornerstone. Pacific Cornerstone?s largest single shareholder happens to be Roussel.

According to FINRA, Pacific Cornerstone sold private placements in Cornerstone Industrial Properties and CIP Leveraged Fund Advisors via offering documents and accompanying sales literature that contained targets as to when investors would receive the return of their principal investment and the yield on their investment.

The offering documents included statements that the affiliated entities targeted returns of principal in two to four years and targeted an unrealistic yield on a $100,000 investment in excess of 18%. The alleged actions took place from 2004 to 2009.

In total, investors placed more than $50 million into the two deals. FINRA has not stated how much, if any, of clients? money may be missing.

Over the five-year period in question, FINRA says that Roussel told investors that all was well with their investments. In addition, he periodically sent letters to investors that portrayed a positive yet unrealistic outlook for their investments. The letters also failed to include required risk disclosures, as well as a complete financial picture of Cornerstone Industrial Properties and CIP Leveraged Fund Advisors.

Maddox Hargett & Caruso is investigating ongoing complaints by investors who sustained losses in private placement offerings related to Medical Capital Holdings, Provident Asset Management LLC and Pacific Cornerstone Capital. If you?ve suffered financial losses in any of these investments, contact us to tell your story.

Full post as published by Representing Investors on February 18, 2010 (boomark / email).