Cova Capital Partners LLC has agreed to pay a fine of $30,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Between June 2018 and December 2021, Cova recommended three private placements to retail customers without conducting due diligence sufficient to form a reasonable basis to believe that the offerings were suitable for or in the best interests of at least some investors.
As a result, Cova willfully violated Rule 151-1 (a)(l) under the Securities Exchange Act of 1934 (Regulation Best Interest or Reg BI) and violated FINRA Rules 2111 and 2010.
Additionally, between June 2018 and December 2023, Cova failed to establish, maintain, and enforce a supervisory system, including written policies and procedures, reasonably designed to achieve compliance with its suitability and best interest obligations in connection with its sale of private placement offerings.
As a result, Cova willfully violated Reg Bi’s Compliance Obligation and violated FINRA Rules 3110 and 2010.
Cova also violated FINRA Rules 5123 and 2010 by failing to make a timely filing in connection with one private placement offering.
On top of the $30,000 fine, Cova consented to the imposition of a censure and an undertaking that a member of its senior management who is a registered principal of the firm shall certify in writing that the firm has remediated the issues and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Reg BI’s Care Obligation.
