Jackson Jambalaya

The Financial Industry Regulatory Authority (FINRA) imposed a $10,000 fine on local investment guru Leroy Paris, II and suspended him from working under his own supervision for six months. Mr. Paris agreed to the sanctions. FINRA is the leading independent regulator for all securities firms "doing business in the United States".

Mr. Paris owned and operated several investment firms: Meadowbrook Capital, LLC. and Meadowbrook Securities. Meadowbrook Capital is also the 100% owner of Investlinc Securities, LLC. Mr. Paris was the owner of that company but made Meadowbrook Capital the formal owner on March 4, 2009. His firms offered investment opportunities for private investors. Mr. Paris sits on the boards of several charities and penned several essays in the Northside Sun describing his mission trips to Africa.

Mr. Paris signed the consent decree "without admitting or denying the findings". The decree focuses on Mr. Paris's role in the sale of private placements for Medical Capital Holdings, Inc. and Provident Royalties, LLC. The SEC prosecuted Medcap for fraud after receiving over $2 billion from investors (yes, that is a "b") and defaulting on over $1 billion in notes. SEC complaint, Receiver's website. A federal court agreed with the SEC and placed the company in receivership on August 3, 2009. Copy of order. Medcap sold receivables with interest rates ranging from 8.5% to 10.5% and terms of one to seven years. Medcap used broker-dealers such as firms operated by Mr. Paris to sell the receivables. Articles about Medcap failure. Here is one juicy Medcap story.

FINRA stated Mr. Paris did not perform due diligence in selling $635,000 of Medcap securities to seven investors in the second half of 2008 even though Mr. Paris should have known Medcap was "having trouble making both principal and interest payments". Medcap had sent a letter to broker-dealers on August 5, 2008 stating it could not make principal payments on time. A September 30, 2008 report stated Medcap was 35 days late in making principal payments. Wells Fargo and Bank of New York Mellon sent a notice of default to all noteholders on November 10, 2008 (p.5). The result was several investors probably lost their money when Medcap collapsed.

Mr. Paris also sold securities for Provident Royalties. Investor protection.com states
"Texas-based Provident Royalties LLC and three company founders have been charged with securities fraud by the Securities and Exchange Commission (SEC) for allegedly bilking thousands of oil and natural gas investors in an elaborate $485 million Ponzi scheme....

The SEC alleges that Provident falsely promised investors yearly returns of up to 18% and misrepresented how 85% of the funds raised through the offerings would be used to purchase interests in oil and gas real estate, leases, mineral rights, and interests, exploration and development. In reality, the SEC says that less than 50% of investor funds were used for their stated purpose."

FINRA in effect called the sales a ponzi scheme (p.7) as they were used to "pay earlier investors their dividends and the return on principal, rather than being invested in oil and gas assets" (as they were told the money would be used.).

FINRA stated Mr. Paris sold $1,090,000 to seventeen investors. Once again Mr. Paris failed to perform due diligence or his assigned responsibilities in selling the securities. The order states Mr. Paris "did not perform any due diligence (p.8). It states he did not visit the company, did not see or request an financial information and did not conduct any follow-up due diligence one he made the decision to sell the securities. The order said reports were available to Mr. Paris that would have shown Provident was having trouble meeting its obligations when he was selling its securities to investors. Under the order, Mr. Paris can continue to work in the securities industry but under the supervision of another company. Mr. Paris is not allowed to be a principal in any firm for six months.