National Financial Services Ordered Cease and Desist from Committing Violations involving FuelCell Public Offerings that Raised $148 Million over Twelve YearsTuesday, September 15, 2020
On September 3, 2020, the Securities and Exchange Commission (SEC) instituted cease-and-desist (C&D) proceedings against National Financial Services, LLC (NFS) following an Offer of Settlement for failing to satisfy its prospectus delivery obligations to investors in connection with public stock offerings of FuelCell Energy, Inc. (FuelCell), a Delaware corporation based in Danbury, Connecticut that designs, manufactures, and installs fuel cell power plants. FuelCell’s stock trades on the Nasdaq Global Market.
According to the C&D order, NFS raised over $148 million through sales of over 70 million FuelCell stock shares in five public offerings from 2005 to 2017, without delivering final prospectuses, as permitted by Section 5(b)(2) and Rule 173 of the Securities Act. FuelCell’s five offerings were considered at-the-market shelf offerings and sold into the market at the prevailing market price, as opposed to selling a fixed number of shares at a fixed price all at once. Without a final prospectus, the market and its investors may not have known the quantity of securities in each offering or that FuelCell had commenced each public offering.
FuelCell’s trading desk, Institutional Cash Equities Desk, which conducted the public offerings, “did not generally engage in underwriting activities,” and NFS did not have policies or procedures in place to prevent or detect these violations.
Based on the foregoing, NFS violated Section 5(b)(2) and Rule 173 of the Securities Act to ensure delivery of final prospectuses to investors who purchased the securities and Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers Act for failing to prevent and detect their violations of Section 5(b)(2) and 173. The SEC ordered NFS cease and desist from committing or causing any violations and any future violations of the previously stated securities industry rules. The SEC also censured NFS and ordered it to pay $2,461,193 in disgorgement, prejudgment interest and civil money penalties.
If you lost money investing in FuelCell (FCEL) at the advice of an NFS broker, we may be able to help you recover your losses. Call us (1-877-410-8172) for a free consultation.