TPEG Securities, LLC has agreed to pay a fine of $175,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Between September 2018 and May 2024 (the relevant period), TPEG sold over 200 private placement offerings issued by its affiliate. The firm reviewed and distributed sales materials to investors and potential investors concerning each offering.

During the relevant period, TPEG sent numerous communications that included aggregated Internal Rates of Return (IRR) and Cash Multiple Values relating to the sponsor’s prior closed deals.

The inclusion of aggregated sponsor performance metrics violated FINRA Rule 2210(d)(1)(B) because such metrics mask the performance of the individual closed deals and were not representative of any specific investment return.

During the relevant period, TPEG also violated FINRA Rule 2210(d)(1)(F) by sending investors retail communications that projected investment performance. For instance, in one offering communication, TPEG stated: “The three acquisitions are expected to close during Q1 of 2022 and projections support a target IRR of 31.1%+ and a cash multiple of ~296% over a four-year hold period.”

Therefore, TPEG violated FINRA Rules 2210(d)(1)(B), 2210(d)(1)(F), and 2010.

Also, during the relevant period, TPEG failed to report statistical and summary information regarding 15 written customer complaints to FINRA because the firm misunderstood the nature of the grievances and its obligations under Rule 4530(d).

Specifically, TPEG mistakenly believed that the grievances about private placement transactions it sold to customers related to the issuer, rather than TPEG. Because the customer grievances concerned investments sold by TPEG, the firm was required to report them.

Therefore, TPEG violated FINRA Rule 4530(d) and 2010.

Finally, Dduring the relevant period, TPEG did not establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with its customer complaint reporting obligations under Article V, Section 2 of FINRA’s By-Laws and FINRA Rule 4530(d).

Although TPEG’s written supervisory procedures discussed customer complaints generally, the procedures did not provide reasonable guidance to registered representatives on how to identify customer complaints, how to discern whether a customer complaint concerned the non-regulated issuer or the broker-dealer, or the reportability criteria for complaints necessitating a statistical filing under FINRA Rule 4530(d) and disclosure via the Form U4.

Therefore, TPEG violated FINRA Rules 3110 and 2010.

On top of the $175,000 fine, the firm has agreed to a censure.