FINRA

WILLFUL VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULES 10B-9 AND 10B-5, VIOLATED FINRA RULES 2010, 2020, NASD RULE 2110: MANCHESTER'S FIRM ACTED AS THE PLACEMENT AGENT FOR OFFERINGS BY A LIMITED LIABILITY CORPORATION AND A LIMITED LIABILITY COMPANY, AND HE WAS A MANAGING MEMBER OF THESE ENTITIES. THE LIMITED LIABILITY CORPORATION WAS FORMED TO ACQUIRE FRANCHISE RIGHTS FROM A COMPANY AND TO OWN AND OPERATE FRANCHISE STORES. THE LIMITED LIABILITY COMPANY WAS FORMED TO ACQUIRE INTEREST IN A CORPORATION WHOSE SECURITIES WERE PUBLICLY TRADED. THE COMPANY'S PRIVATE PLACEMENT OFFERED MEMBERSHIP INTERESTS IN THE COMPANY, AND THE MINIMUM SALES CONTINGENCY WAS MET. THE CORPORATION'S PRIVATE PLACEMENT OFFERED SERIES B AND SERIES C UNITS IN A CONTINGENCY OFFERING. THE OFFERING PERIOD FOR THE SERIES B WAS EXTENDED AND THE MINIMUM SALES CONTINGENCY WAS MET. THE OFFERING PERIOD FOR THE SERIES C WAS EXTENDED BUT THE SERIES C DID NOT MEET THE MINIMUM SALES CONTINGENCY. DESPITE THE FACT THAT THE PRIVATE PLACEMENT MEMORANDUM STATED THAT THE FUNDS RECEIVED FROM INVESTORS WOULD BE RETURNED TO THEM IF THE MINIMUM SALES CONTINGENCY WAS NOT MET, THE FUNDS WERE RELEASED TO THE ISSUER. MANCHESTER ALSO DEPOSITED INVESTOR FUNDS RECEIVED IN THE OFFERINGS SUBJECT TO MINIMUM SALES CONTINGENCIES INTO AN ACCOUNT CONTROLLED BY THE ISSUER BEFORE THE CONTINGENCIES WERE MET. MANCHESTER THUS CAUSED THE FUNDS TO BE RELEASED TO THE ISSUER BEFORE THE ISSUER WAS ENTITLED TO RECEIVE THEM, WHICH CONSTITUTED A WILLFUL VIOLATION OF SECTION 10(B) OF SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-9 THEREUNDER. PURSUANT TO EXCHANGE ACT RULE 15C2-4, INVESTOR FUNDS RECEIVED BEFORE THE SATISFACTION OF THE MINIMUM SALES CONTINGENCIES WERE REQUIRED TO BE, BUT WERE NOT, DEPOSITED INTO A BANK ESCROW ACCOUNT OR A TRUST ACCOUNT, FOR BOTH SERIES B AND SERIES C OFFERINGS AND FOR THE MEMBERSHIP INTERESTS OFFERING. INSTEAD, THE FUNDS WERE DEPOSITED INTO A BANK ACCOUNT IN THE NAME OF THE ISSUERS. MANCHESTER, ACTING FOR THE FIRM, ESTABLISHED THE ISSUERS' BANK ACCOUNTS AND CAUSED INVESTOR FUNDS RECEIVED BY THE FIRM TO BE DEPOSITED INTO THE ACCOUNT FOR THE SERIES B AND C OFFERINGS, AND FUNDS RECEIVED FOR THE MEMBERSHIP INTERESTS OFFERING PRIOR TO THE SATISFACTION OF THE CONTINGENCY TO BE DEPOSITED INTO THAT OFFERING'S ACCOUNT. MANCHESTER FAILED TO ESTABLISH QUALIFYING ESCROW OR TRUST ACCOUNTS FOR THE OFFERINGS AND FAILED TO CAUSE INVESTOR FUNDS RECEIVED BY THE FIRM TO BE DEPOSITED INTO SUCH ACCOUNTS, THEREFORE, MANCHESTER CAUSED THE FIRM TO VIOLATE EXCHANGE ACT RULE 15C2-4. MANCHESTER ENGAGED IN UNAUTHORIZED USE OF OFFERING PROCEEDS BY LENDING OFFERING PROCEEDS TO OTHER PRIVATE ENTITIES, WHEN THE OFFERING MATERIALS DID NOT PROVIDE OR SUGGEST THAT EITHER INVESTED FUNDS OR PROCEEDS OF OPERATIONS COULD BE USED TO MAKE LOANS TO ENTITIES IN WHICH THE MANAGING GENERAL PARTNER HAD AN INTEREST. FURTHER, MANCHESTER DID NOT OBTAIN THE INVESTORS' CONSENTS TO DEVIATE FROM THE PROVISIONS OF THE OFFERING MATERIALS AND MAKE THE LOANS. THUS, IT WAS A WILLFUL VIOLATION OF SECTION 10(B) OF SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER. MANCHESTER CAUSED A COMPANY ENGAGED IN OIL AND GAS DRILLING, TO LEND FUNDS TO THE LIMITED LIABILITY CORPORATION, WHEN AN ENTITY CONTROLLED BY MANCHESTER, WAS THE MANAGING PARTNER OF THE OIL AND GAS COMPANY. MANCHESTER ALSO CAUSED THE OIL AND GAS COMPANY TO MAKE LOANS TO THE ENTITY HE CONTROLLED. THE DEBTS WERE EVIDENCED BY PROMISSORY NOTES. THE PROMISSORY NOTES WERE EXECUTED BY MANCHESTER ON BEHALF OF THE LIMITED LIABILITY CORPORATION AND ON BEHALF OF HIS ENTITY. THE CORPORATION HAS NOT REPAID THE OUTSTANDING BALANCES ON THE LOANS.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

8/29/2013

WITHOUT ADMITTING OR DENYING THE FINDINGS, MANCHESTER CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES. RESPONDENT UNDERSTANDS THAT THIS SETTLEMENT INCLUDES A FINDING THAT HE WILL FULLY VIOLATED SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, AND RULES 10B-5 AND 10B-9 THEREUNDER, AND THAT UNDER ARTICLE III, SECTION 4 OF FINRA'S BY-LAWS, THIS MAKES RESPONDENT SUBJECT TO A STATUTORY DISQUALIFICATION WITH RESPECT TO ASSOCIATION WITH A MEMBER.