Vistia Capital: FINRA Censures, Fines Colorado Firm

Lone Tree, Colorado broker-dealer Vistia Capital (CRD# 311342) was recently censured and fined in connection with alleged rule violations. According to a Letter of Acceptance, Waiver, and Consent (No. 2022075203301), the enforcement action stemmed from allegations involving the outside business activities (OBAs) of firm representatives.

As the Letter notes, Vistia Capital’s business between June 2021 and January 2023 centered around the recommendation of private placements. During that period, the firm’s written supervisory procedures required supervisors to review their representatives disclosed OBAs for possible conflicts of interests, but the rules did not “provide any guidance to supervisors” on how to determine whether the OBAs compromised the representatives’ responsibilities with the firm business, could be viewed as part of the firm business, should be limited or prohibited, should be characterized as OBAs, or should be treated as outside securities activities.

The Letter goes on to describe findings that the firm failed to “reasonably evaluate, or document its evaluation of, seven OBAs disclosed by two registered representatives.” Some of these involved issuers of private placements recommended by the firm, FINRA found, and the firm did not reasonably evaluate whether they interfered with or compromised the representatives’ duties to Vistia Capital or its customers. “For example,” the Letter states, “Vistia approved an OBA for a registered representative to consult with an issuer during the same time period that the representative also recommended that Vistia’s customers invest in that issuer’s private placement offerings.”

In spite of this, the firm allegedly did not evaluate the activity. It also allegedly failed to identify or investigate red flags in the OBA disclosures, including one instance in which two representatives disclosed the same OBA, an affiliate of the private placement issuer, but whereas one described the business’s purpose as not investment related, the other described it as investment related. “The firm did not obtain additional information about the nature of the outside business and the representatives’ activities,” according to the Letter, “and could not reasonably evaluate the OBA.”

Finding that Vistia Capital violated FINRA Rules 3110, 3270.01, and 2010, FINRA censured the firm, issued a fine of $40,000, and ordered it to remediate the issues identified in the letter.

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