According to FINRA, Insigneo Securities, LLC was censured and fined $85,000 for failing to reasonably supervise a registered representative's participation in private securities transactions and for TRACE reporting violations.

The firm discovered that a representative participated in private securities transactions by recommending that customers invest in a private placement offering not approved by the firm. Rather than taking appropriate corrective action, the firm implemented a conditional exception that applied only to that representative, permitting him to sell private placements through an unaffiliated investment advisor without providing the detailed information required by FINRA Rule 3280.

The representative sold securities in six private placements away from the firm totaling $9.75 million to 25 investors, eight of whom were also firm customers, without providing advance notice. The firm did not conduct contemporaneous review of the offerings or determine whether the representative received selling compensation requiring the transactions to be recorded on the firm's books.

The representative was ultimately barred from the securities industry after resigning from the firm.

FINRA also found that the firm overreported, failed to report, and inaccurately reported almost 10,000 executed customer transactions to TRACE. These errors constituted approximately 24 percent of the TRACE reports the firm submitted during the relevant period.

Private securities transactions present significant risks because they occur outside the normal supervisory framework of a broker-dealer. Investors should be cautious when representatives recommend investments that are not offered through their firm's normal channels, and should verify that proper disclosures have been made.