FINRA Fines Haywood USA $175,000 for Failure to Perform Due Diligence

The Financial Industry Regulatory Authority censured and fined Haywood Securities (USA) Inc. after the firm recommended 134 sales totaling almost $11 million in 53 different private placements to U.S. customers without “conducting reasonable due diligence of the issuers and the offerings.”

From September 2014 to the present, Haywood USA recommended sales to U.S. customers of a certain type of Canadian private placement offering referred to as “nonbrokered private placements,” which are offerings in which the firm or its parent do not serve as agent of the issuer but rather act as a “finder” that introduces investors to the issuer. FINRA says Haywood USA generally failed to conduct appropriate due diligence of the offerings beyond a cursory search and review of the issuer’s recent public filings, among other things.

FINRA says the firm failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with Regulation Best Interest, among other violations of FINRA rules. Additionally, Haywood USA failed to file offering documents with FINRA for nearly a decade, from September 2014 to February 2023.

Haywood Securities consented to a censure, a $175,000 fine, and an undertaking that, within 60 days of the date of the notice of acceptance of the AWC, a member their senior management who is a registered principal of the firm shall verify that the firm has remediated the issues identified and implemented a supervisory system.

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