Greenbird Capital LLC has agreed to pay a fine of $50,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From May 2021 through December 2023, the firm failed to establish, maintain, and enforce a system reasonably designed to achieve compliance with FINRA’s telemarketing rules.

The firm had no system or procedure to monitor outbound calls made by the firm’s registered representatives for numbers on the national do-not-call list.

In addition, although a principal of the firm occasionally checked whether registered representatives called customers during the times permitted by FINRA Rule 3230, the firm did not specify when, or how often, such reviews took place.

Subsequent to the relevant period herein, the firm implemented the use of a pre-existing relationship form, revised its written supervisory procedures to include language addressing general solicitation and the pre-existing relationship form, and stopped engaging in cold calling.

During this period, the firm did not establish or implement a system, including written procedures, reasonably designed to identify general solicitations of private placement offerings made pursuant to Rule 506(b) of Regulation D.

The firm’s written procedures did not prohibit registered representatives from engaging in a general solicitation of such offerings or provide any guidance on what constituted a pre-existing, substantive relationship.

In addition, Greenbird Capital did not have a system to reasonably monitor and document when the firm had established a substantive relationship with a prospective investor, or to confirm- before a prospective investor was solicited for an offering – that the firm had such a relationship with that investor.

In connection with the offerings made during the relevant period, registered representatives made hundreds of thousands of calls to prospective investors without a reasonable system to ensure that the firm established substantive relationships with those individuals prior to soliciting the individual for a specific investment.

As a result, with respect to certain of the investors in at least one of the offerings referenced above, the firm was unable to reasonably verify that a pre-existing, substantive relationship existed prior to the solicitation.

From May 2021 through December 2023, Greenbird Capital sold investments in 14 private placements in reliance on the Rule 506(b) safe harbor, raising approximately $24 million in capital.

The firm has agreed to a $50,000 fine and a censure.