← Broker database 2023-11-20
Sara Yasmin Qazi Suspended for Undisclosed Private Securities Transaction and Improper Communications
According to FINRA, Sara Yasmin Qazi was fined $15,000 and suspended for three months for participating in a private securities transaction without providing written notice to or receiving approval from her member firm, and for distributing misleading materials about a private offering.
Qazi participated in a private securities transaction in which a customer purchased $250,000 of preferred stock in a healthcare company without providing written notice to or receiving approval from her firm. At the customer's request, Qazi conducted due diligence on the healthcare company, including reviewing its financial data and arranging and attending due diligence calls with its management and other investors. She also facilitated the customer's investment by assisting with execution of agreements related to the transaction and arranging the wire transfer of the customer's funds. Qazi did not earn any compensation from her participation.
Additionally, Qazi distributed a written presentation prepared by the healthcare company to five individuals, including one firm customer, which included information regarding a private offering but did not disclose any of the risks associated with an investment in the offering. She also distributed a financial model prepared by the healthcare company to a firm customer, which contained financial forecasts but did not disclose any risks, limitations, or conditions that could impede achievement of such forecasts.
Private securities transactions - also known as "selling away" - must be disclosed to the representative's firm so the firm can evaluate whether the activity should be permitted and, if so, how it should be supervised. When representatives conduct such transactions without firm knowledge, the firm cannot supervise the activity or protect customers from unsuitable or fraudulent investments.
The distribution of materials about the private offering that highlighted potential returns without disclosing associated risks is particularly problematic because it presents a misleading picture that could induce unsuitable investments. Investors considering any investment need balanced information about both potential returns and risks.