FINRA Department of Enforcement Files Complaint against New York City Firm and Former CEO for Soliciting Investments in Purported Ticket Resale Business Turned Ponzi SchemeFriday, June 12, 2020
The Financial Industry Regulatory Authority (FINRA) Office of Hearing Officers recently reviewed a complaint against Tripoint Global Equities, LLC (Tripoint), headquartered in New York, New York, and its chief executive officer, Mark Elenowitz, regarding alleged unsuitable recommendations made to customers. Elenowitz was associated with Tripoint from May 2007 to May 2020. He has been associated with Digital Offering LLC and Cambria Capital, LLC in New York, New York since March 13, 2020 and March 11, 2020, respectively.
According to the complaint filed by FINRA Department of Enforcement, Tripoint and Elenowitz recommended and sold $16 million in participation interests in four private placements to 42 customers without conducting reasonable due diligence on the offerings and without having a reasonable basis that the recommendations were suitable for some of the investors. The issuers were purported to be in the business of buying and re-selling tickets to live concerts and theater events. The companies were led by two principals who had questionable abilities to operate and manage a profitable ticketing resale business and, according to FINRA Department of Enforcement, who made several claims to Elenowitz that should have been easily identifiable red flags. When the offering turned out to be a Ponzi scheme, Tripoint investors lost millions of dollars. Tripoint received nearly $500,000 in placement agent fees.
The FINRA Complaint asserts that Elenowitz personally solicited one customer who invested $500,000 in the scheme based on his recommendations. The Department of Enforcement asserts that Elenowitz did not have a reasonable basis to believe that this investment and others related to this Offering, was suitable considering he and Tripoint failed to enforce Tripoint’s written supervisory procedures and continually ignored red flags that could have alerted him to potential misconduct. Throughout the time period in which Elenowitz was soliciting this offering, he was designated supervisor responsible for conducting due diligence on the offerings. Elenowitz failed to respond to numerous red flags and took no steps to verify the principals’ claims of prior success in the ticket business, their background, or review financial records related to the purported business.
Accordingly, FINRA found Tripoint and Elenowitz violated FINRA Rules 2111 and 2010. FINRA Department of Enforcement is requesting relief to make findings of fact and conclusions of law that Mark Elenowitz and Tripoint Global Equities, LLC committed the violations alleged in the complaint and order that sanctions and fines be imposed under FINRA Rule 8310(a) and 8330.
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