|Pinnacle Interim Suspension (PDF 33 KB)
Pinnacle Temporary Cease and Desist Order (PDF 168 KB)
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has suspended indefinitely Pinnacle Partners Financial Corporation, of San Antonio, TX, and its President, Brian K. Alfaro, for failure to comply with a FINRA Temporary Cease and Desist Order prohibiting their fraudulent misrepresentations. The suspension resulted from FINRA's Notice of Suspension that alleged that Pinnacle and Alfaro had continued to make fraudulent oral and written misrepresentations and omissions in connection with their offer and sale of certain oil and gas joint interests, and had otherwise failed to comply with the terms of the Temporary Order FINRA issued on January 21, 2011.
Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "Brian Alfaro and Pinnacle pose a serious risk to the investing public. Even after the issuance of a Temporary Cease and Desist Consent Order, Alfaro and Pinnacle continued to market oil and gas offerings through material misrepresentations, with the intent to deceive investors."
FINRA filed a complaint against Pinnacle and Alfaro on Dec. 3, 2010, alleging that Alfaro and Pinnacle operated a "boiler room" in which numerous brokers placed thousands of cold calls on a weekly basis to solicit investments in oil and gas drilling joint ventures Alfaro owned or controlled. The complaint further asserts that Pinnacle raised more than $10 million from over 100 investors, and that Alfaro diverted some of the customer funds for unrelated business and personal expenses. The hearing on these allegations will be Sept.12, 2011, at which time the Hearing Panel will consider the merits of these claims and whether to order additional penalties.
As charged by FINRA, Pinnacle and Alfaro included numerous misrepresentations and omissions in the investment summaries for the offerings, including grossly inflated natural gas prices, projected natural gas reserves, estimated gross returns and estimated monthly cash flows. Pinnacle and Alfaro deliberately attempted to mislead investors by deleting unfavorable information from well operator reports and providing them with doctored maps, which omitted numerous dry, plugged or abandoned wells near their projected drilling sites. Also, according to the complaint, Alfaro's misuse of customer funds included attempts to retain the grossly inflated "drilling costs," which were funds Alfaro obtained by convincing customers to allow him to transfer their money into other fraudulent offerings. In another instance, Alfaro collected more than $500,000 in subscription costs for a well that was never drilled, and used those funds for unrelated personal and business expenses.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2010, members of the public used this service to conduct 17.2 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
FINRA is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing and enforcing rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit www.finra.org.