On July 20, 2017, FINRA’s appeals body, the National Adjudicatory Council, upheld a hearing panel’s decision to bar David Escarcega from the securities brokerage industry. The hearing panel found that Escarcega, a former registered representative of Center Street Securities, Inc. (CRD#:26898), willfully made materially false and misleading statements in connection with seven customers’ purchases of GWG debentures, and made unsuitable recommendations in connection with a further 12 customers’ purchases of the debentures. The aggregate amount of the fraudulently-procured and unsuitable investments exceeded $2 million.
In 2014, Center Street Securities was fined and censured for making unsuitable recommendations of the illiquid and high-risk GWG Debentures to conservative investors, and for failing to reasonably supervise the sales of the debentures. Center Street began selling the Debentures to its customers in February 2012, and over the next 18 months, sold them to 269 customers.
Center Street was one of several broker-dealers involved in the sale of GWG securities. Other firms who have been either directly sanctioned or whose securities agents have been sanctioned by FINRA in connection with sales of GWG Debentures include Arque Capital, Allied Beacon Partners, 79 Capital Partners, and Freedom Investors Corp.
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