December 4, 2017 – An AWC was issued in which Lavigne was fined $14,500, suspended from association with any FINRA member in all capacities for 30 days, suspended from association with any FINRA member in any principal capacity for 20 days, and ordered to pay $8,520, plus interest, in disgorgement of commissions received. Without admitting or denying the findings, Lavigne consented to the sanctions and to the entry of findings that due diligence he conducted for an offering of convertible notes by an issuer was inadequate. The findings stated that Lavigne failed to adequately supervise his member firm’s due diligence and failed to ensure that it adequately investigated information provided by the issuer, which sought financing to develop a digital signage advertising network. The ability to lease signage space in high-traffic areas was central to the issuer’s business model. The issuer’s claim that it had secured prime locations for its signs was a selling point communicated to potential investors by both it and Lavigne. The due diligence performed did not adequately address the issuer’s financial condition, the reasonableness of its projections or the background of its principals. Lavigne also did not adequately verify representations made by the issuer. A lawyer retained by Lavigne’s firm to assist with its due diligence on the issuer contacted him on multiple occasions noting documents the issuer had failed to provide and pointing out inconsistencies in the information previously provided by the issuer. Lavigne failed to identify and investigate material information, including litigation alleging securities fraud and the existence of liens related to officers and predecessors of the issuer, which could impact its assets and business. As a result, Lavigne did not have a reasonable basis on which to believe the notes were suitable for any customer. However, Lavigne and his partner recommended and sold the notes to firm customers and for these investments, Lavigne received $8,520. At the time Lavigne recommended and sold the notes, he did not know whether information the issuer provided was accurate and did not question anyone associated with the issuer about the commitments for signage sites in the absence of executed leases. The findings also stated that Lavigne distributed issuer-prepared sales materials to customers or potential customers that were misleading, omitted certain information that caused them to be misleading, or that failed to provide a fair and balanced presentation of information. The suspension in all capacities was in effect from January 2, 2018, through January 31, 2018. The suspension in any principal capacities is in effect from February 1, 2018, through February 20, 2018. (FINRA Case #2014041862702). Lavigne was affiliated with Spencer Edwards, Inc. since 2013.
In a related matter, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the Western District of Washington on December 4, 2017 against DONALD E. MacCORD, JR., SHANNON D. DOYLE, and DIGI OUTDOOR MEDIA, INC. (“DOM”). The SEC complaint alleges inter alia that the DOM securities offering was fraudulent and that in February 2015, Digi filed a registration statement with the Commission, seeking to sell shares of the company to the public. The registration statement painted a misleading picture for prospective investors about Digi’s ability to generate revenue, its financial condition, and its prospects for success. See, https://www.sec.gov/litigation/complaints/2017/comp24001.pdf.