The allegations read: Sec section 10(b) of the exchange act of 1934, rule 10b-9, nasd rules 2110, 3010: a member firm, acting through brooks, commenced a "minimum-maximum" offering conducted by a company and participated in a best efforts, "minimum-maximum" offering conducted by another company. The firm, acting through brooks, failed to ensure that investor funds from both offerings were deposited into qualified escrow accounts. Investor funds from one offering were deposited into an attorney's interest on lawyer trust account (iolta) and investor funds from the other offering were deposited into the attorney's trust account, instead of into a bank escrow account as required by sec rule 15c2-4. The firm, acting through brooks, accepted investor checks for one of the offerings, totaling $145,000, and forwarded the checks directly to the issuer prior to the minimum offering amount being raised and released funds from the escrow account of the offering prior to the minimum offering amount being raised and the firm's actions rendered false the representation in the offering memorandum that investor funds would be promptly returned if the minimum offering amount was not obtained during the offering period. In connection with these offerings, by failing to properly escrow funds received from each offering, and releasing funds from one of the offerings to the issuer prior to the minimum offering amount being raised, the firm, acting through brooks, lost its exemption to sec rule 15c3-3, as such, became subject to the full provisions of the rule and was required to perform reserve computations and to make deposits into a special reserve bank account for the exclusive benefit of customers of the offerings but the firm failed to make any such computations or deposits. The firm, acting through brooks, conducted a securities business while failing to maintain its required minimum net capital. The firm, acting through brooks, failed to establish and maintain a supervisory system that was reasonably designed to achieve compliance with applicable securities laws and regulations and with nasd rules, specifically; the firm's procedures regarding contingent offerings were deficient.
