FINRA Expels B-D for Marketing Ponzi-Scheme

The financial Industry Regulatory Authority on Thursday said it expelled Dallas-based Provident Asset Management LLC which marketed fraudulent private placements offered by its affiliate, Provident Royalties, linked to a Ponzi scheme. Investors were told the money raised would buy interests in oil and gas exploration activity, along with real estate, oil and gas leases, and mineral rights.

FINRA said that instead, Provident Royalties deposited investor funds into a separate bank account and then - in typical Ponzi-like fashion - commingles that money in various accounts that used it to pay dividends and principal to earlier investors. These offerings were sold through more than 50 retail broker-dealers across the country from September 2006 through January 2009, and raised more than $480 million through about 7,700 individual investments.

Provident Asset Management consented to FINRA's findings, but it neither admitted nor denied the charges.