For the second time in three years, Pacific Cornerstone Capital Inc. is being investigated by the Financial Industry Regulatory Authority. Pacific Cornerstone is the broker-dealer arm of Cornerstone Real Estate Funds.
In a Securities and Exchange Commission filing, Pacific Cornerstone Capital said it was “involved with an arbitration proceeding before Finra and one Finra investigation.” The details of the investigation were not included in the filing.
Finra fined the form $700,000 in 2009 for allegedly misstating material facts involved in the sale of private placements, according to Finra BrokerCheck.
“I can’t speak to the Finra investigation, and it could be a number of things,” said Tony Chereso, chief executive of FactRight LLC, a consulting and due-diligence firm for alternative investments such as nontraded REITs.
In an SEC filing, Pacific Cornerstone stated that it did not know what to expect in the future regarding the Finra matters.
“Outside counsel for the company has advised that at this stage of the proceedings, they could not offer an opinion to probable outcome of the matters,” the company filing said. “Accordingly, no provision for loss has been recorded in the accompanying financial statements for 2011.”
In an alleged effort to pull back its reach, Pacific Cornerstone filed to deregister with the Commonwealth of Massachusetts, according to Finra BrokerCheck.