Sales of private placements in Provident Royalties LLC have come back to haunt broker/dealer Okoboji Financial Services. On May 28, the Iowa-based company filed notice with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) of its intent to withdraw as a broker/dealer. Investment News first reported the story on June 2.
Last summer, the SEC brought a fraud lawsuit against Provident Royalties and its related funds and business entities. In the complaint, the SEC charged Provident with selling fraudulent private-placement offerings from September 2006 through January 2009. According to the SEC, Provident raised $495 million from at least 7,700 investors throughout the country.
Okoboji Financial also is named in the SEC’s lawsuit for having received a 5% payout in connection to selling Provident notes. As reported in the Investment News article, Okoboji was fined $30,000 by FINRA in 2009 for selling private placements to prospective investors with whom neither the firm nor its representatives had a pre-existing relationship.
In March 2010, Okoboji Financial lost a $978,000 arbitration claim over unsuitable structured settlements, according to records with FINRA.
In April, a lawsuit was filed in federal court in South Dakota involving an Okoboji representative who sold private placements in Provident and Medical Capital Holdings to 87-year-old Thelma Barber. As in the Provident case, the SEC charged Medical Capital Holdings with fraud in July 2009. It is now under a court-appointed receiver.