Ahmed Gheith Suspended by FINRA for an Alleged Securities Act Violation
Ahmed Gheith (CRD #: 5783951), a broker registered with Ceros Financial Services, has been suspended by FINRA, according to his BrokerCheck record, accessed on January 18, 2023. If you have questions about his alleged conduct as a broker, keep reading.
2022 FINRA Suspension
On December 16, 2022, Ahmed Gheith consented to the entry of findings that he allegedly solicited 40 prospective investors to purchase private placement offerings in a way that violated Section 5 of the Securities Act of 1933.
The Securities Act of 1933 requires the registration of securities unless they qualify for an exemption or “safe harbor.” These exceptions and safe harbor status are defined under Regulation D and Rule 506(b) therein. Relevant to these allegations is that securities issuers can obtain safe harbor status for their securities by not using general solicitation/advertising practices to market them.
According to a Letter of Acceptance, Waiver & Consent (AWC), Ahmed Gheith allegedly used publicly-available information to cold-call investors and discuss private placement offerings as part of his typical business practices. Between September 2019 and January 2020, he allegedly solicited 40 prospective investors to purchase two different private placement offerings which claimed exemption from registration under Rule 506(b) of Regulation D.
Four of these investors allegedly invested $175,000 in one of these offerings. The AWC alleges that none of these investors had previously invested in securities offered by Ahmed Gheith’s firm, Noble Capital, or had a substantive relationship with him before investing. The AWC further alleges that Ahmed Gheith failed to obtain investor questionnaires from them at the time they agreed to invest.
The AWC concludes that these allegations constituted general solicitation and therefore violations of Section 5 of the Securities Act and FINRA Rule 2010.
The Securities Act of 1933
Section 5 of the Securities Act prohibits the sale of unregistered securities.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
Ahmed Gheith consented to the following sanctions:
- $7,500 fine
- 1-month suspension
His suspension began on January 17, 2023, and will end on February 16, 2023.
You can read the full AWC here.
2018 FINRA Suspension
On April 24, 2018, Ahmed Gheith consented to the entry of findings that he allegedly failed to provide notice to his firm, Paulson Investment Company, before participating in private securities transactions between April 2015 and March 2016.
A Letter of Acceptance, Waiver & Consent (AWC) alleges that, in 2014, Ahmed Gheith was allegedly informed by two other brokers about a private offering related to Belize Infrastructure Fund I, LLC, and a real estate development.
The brokers allegedly described the short-term note as intended to raise money for the development of an airport. The AWC alleges that the note qualified as a security under the Securities Act of 1933 and the Securities Exchange Act of 1934.
The brokers allegedly asked Ahmed Gheith to refer any potentially interested clients to them. Ahmed Gheith allegedly knew that the private offering was not approved or offered by Paulson Investment Company, and would therefore qualify as selling away.
However, Ahmed Gheith allegedly contacted four clients during the relevant time period with a description of the private offering and solicitations to speak with the other two brokers about investing.
These clients allegedly invested a total of $3.5 million in the private offering. Ahmed Gheith allegedly received $93,165 in compensation from Canyon Acquisitions for his role in soliciting the clients.
The AWC concludes that this alleged misconduct constituted violations of NASD Rule 3040 and FINRA Rules 3280 and 2010.
FINRA Rule 3280
FINRA Rule 3280 requires brokers to seek approval from their firm before engaging in private securities transactions.
Ahmed Gheith consented to the following sanctions:
- $10,000 fine
- $31,055 disgorgement
- 12-month suspension
His suspension ran from May 7, 2018, through May 6, 2019.
You can read a copy of the AWC here.
Termination from Paulson Investment Company
On August 11, 2017, Ahmed Gheith was fired from Paulson Investment Company following allegations that he violated the firm’s Written Supervisory Procedures (WSPs), failed to answer annual questionnaires honestly, and violated FINRA Rule 3280.
The firm allegedly also took into account a previous client arbitration which alleged fraud, negligence, and unjust enrichment.
On April 13, 2017, an investor named Ahmed Gheith in allegations of fraud, negligence, negligent misrepresentation, and unjust enrichment. The client sought $1 million in damages and received a settlement of $165,000.
Ahmed Gheith has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
Ahmed Gheith is a registered broker in 19 states and Puerto Rico.
He has also worked for the following firms:
- Noble Capital Markets (CRD#:15768)
- Paulson Investment Company (CRD#:5670)
- Aegis Capital Corporation (CRD#:15007)
- Cabot Lodge Securities (CRD#:159712)
- Joseph Gunnar & Company (CRD#:24795)
- Spartan Capital Securities (CRD#:146251)
Kurta Law Can Help
If you worked with Ahmed Gheith and you have concerns about your investments, please contact us today at 877-600-0098 or email@example.com for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.