According to FINRA, CIM Securities, LLC has been censured and fined $70,000 for selling an offering for which no exemption from registration was available, effectively conducting an unregistered distribution of securities.

The firm acted as a placement agent for a private placement offering where the issuer engaged in general solicitation by issuing press releases about the offering. More concerning, the firm's dealings involved a covered person who had been convicted of wire fraud and money laundering and was subsequently barred by the SEC. This individual misled the firm about his identity by providing identity verification documents that did not match his name or age.

Despite these red flags, the firm failed to reasonably respond and relied on the covered person's representations. The required disclosures about this individual's criminal history were never provided to investors as required by Rule 506(e).

Additionally, the firm's written supervisory procedures did not provide reasonable guidance on adequate due diligence for private placements, and the firm distributed investor materials that violated FINRA Rule 2210's content standards by failing to disclose specific risks and making misleading claims about profitability and liquidity.

This case illustrates the importance of thorough due diligence in private placements. Investors considering private offerings should ensure they receive all required disclosures and understand the backgrounds of those involved in the offering.