FINRA fined Los Angeles-based firm WestPark Capital and its founder Richard Rappaport for making negligent misrepresentations and omissions of material fact in selling $3.9 million-worth of promissory notes. As the supervisor in charge of reviewing and giving final approval to offering documents, FINRA also disciplined Rappaport for making negligent misrepresentations and omissions.
According to FINRA's report in AWC #2017054381603, the WestPark Capital Financial Services n/k/a WestPark Capital Group-owned brokerage firm located in Century City sold WestPark Capital Financial Services offerings as promissory notes with three and five year terms, promising investors 5% interest per year as well as additional equity and profit participation. The report indicates that Richard Alyn Rappaport (CRD #1885122) created at least some of the violative sales material and was responsible for its final approval; Rappaport, the founder and CEO of WestPark Capital, is still registered with the firm as both an investment adviser and broker.
Investigators found that WestPark Capital provided misleading or otherwise problematic offering documents to investors. For instance, in claiming the documents contained material misrepresentations and omitted material facts, FINRA's report states that the offering documents portrayed that WestPark had a $1 million line of credit and was not in default, when in fact WestPark had defaulted on both the line of credit and forbearance agreements with its bank.
WestPark Capital also allegedly failed to disclose that the bank had sued both the firm and WestPark part-owner Rappaport. FINRA's investigation resulted in additional allegations that WestPark sent a misleading Historical Analysis document created by Rappaport that misrepresented returns on the notes, and that Rappaport and other firm representatives failed to disclose material conflicts of interest.
The firm also purportedly failed to record all conversations as required under the Taping Rule governing recording procedures relative to specified telephone conversations between firm representatives and existing/potential customers.
FINRA concluded by finding that WestPark as a firm and Rappaport as a registered principal failed to supervise the offerings and did not provide reasonable training to other representatives about the notes.
If you invested with WestPark Capital, Richard A Rappaport, or with any broker or investment adviser in the WestPark Capital Financial Services offering, or similar promissory note offerings based on marketing materials or offering memorandum documents that were misleading or omitted important material facts, and these disclose failures have proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.