Mississippi

Between 2014-2016, Mr. Diaz was barred from all activities by FINRA and the SEC, and also indicted on charges of mail and wire fraud. AFter his bar, he continued to meet with and give investment advice to a previous client. He convinced said client to invest in a private fund. From the time he was barred in 2014, Mr. Diaz received $324,053.28 in commissions for recommendations to the private fund.

Consent

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$15,000.00

Disgorgement

$324,053.28

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-78776, IA Release 40-4524, September 7, 2016: The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Eduardo Guillermo Diaz ("Respondent"). On March 22, 2016, Diaz pled guilty to one count of mail fraud in violation of Title 18 United States Code, Section 1341 before the United States District Court for the Southern District of Mississippi in United States v. Eduardo Guillermo Diaz, Crim. No. 1:15cr68-LG-RHG. On June 22, 2016, a judgment in the criminal case was entered against Diaz. He was sentenced to a prison term of 70 months followed by three years of supervised release and ordered to pay a fine of $15,000 and to make restitution in the amount of $641,435.88. In connection with that plea, Respondent admitted that: From approximately February 2012 through October 2015, he devised a scheme to defraud investors to obtain money for his own personal use; As part of the scheme, he employed material false representations and promises; Diaz solicited significant sums of money from clients, several of whom were prior business relationships and friends; He also used investors' money to pay off previous investors; and In one instance, on or about February 23, 2012, an investor wrote a check for $50,000 and mailed it to Diaz for the purpose of purchasing an annuity. None of the money was invested in an annuity. Instead, Diaz deposited the check into an account in the name of Diaz Financial Services and the funds were converted to Diaz and subsequently used to pay a variety of personal and business related expenses.

Order

Bar (Permanent)

see comment

Indefinite

9/7/2016

FRAUD BY WIRE, RADIO, OR TELEVISION

Dismissed

FRAUDS AND SWINDLES

Pled guilty

MISSISSIPPI

MR. DIAZ FILED MISLEADING INFORMATION ON HIS FORM U4 AND FORM ADV WHEN ATTEMPTING TO REGISTER HIS IA FIRM AND HIMSELF AS AN IAR. SPECIFICALLY, DIAZ FAILED TO DISCLOSE THAT HE IS THE SUBJECT OF BOTH A FINRA AND A MISSISSIPPI SECURITIES INVESTIGATION.

Order

Bar (Temporary/Time Limited)

INVESTMENT ADVISER, INVESTMENT ADVISER REPRESENTATIVE

9 MONTHS

2/4/2014

11/4/2014

Civil and Administrative Penalty(ies)/Fine(s)

$2,000.00

Requalification

FINRA

WILLFULLY VIOLATED SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5; AND VIOLATED FINRA RULES 2010, 2020, 2150, 3240, 3270, NASD RULES 3030, 3040, INTERPRETATIVE MATERIAL-2310-2: DIAZ INTENTIONALLY OR RECKLESSLY MADE UNTRUE STATEMENTS OF MATERIAL FACT TO A CUSTOMER IN WILLFUL VIOLATION OF SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 REGARDING PROPERTIES OF A LIMITED LIABILITY COMPANY HE CONTROLLED AND INTENTIONALLY OR RECKLESSLY OMITTED TO STATE OTHER RELEVANT AND RELATED MATERIAL FACTS TO THE CUSTOMER. THE CUSTOMER'S INVESTMENTS IN THE COMPANY AND THE LOAN TO IT, WHICH TOTALED AT LEAST $365,000, WERE NOT PAID DIRECTLY FROM HER ACCOUNT AT DIAZ'S MEMBER FIRM. AT DIAZ'S REQUEST, SHE WIRED THE FUNDS, COMPRISING THE INVESTMENTS AND LOAN TO THE COMPANY, TO A BANK ACCOUNT, WHICH WAS A PERSONAL BANK ACCOUNT DIAZ CONTROLLED. IN RELIANCE UPON REPRESENTATIONS DIAZ MADE, THE FUNDS THE CUSTOMER PROVIDED TO DIAZ WERE INTENDED FOR USE BY THE COMPANY FOR ITS GENERAL BUSINESS OPERATIONS. DIAZ IMPROPERLY CONVERTED AT LEAST $126,000 OF THESE FUNDS IN HIS BANK ACCOUNT TO HIS PERSONAL USE FOR EXPENDITURES THAT DID NOT BENEFIT THE COMPANY OR THE CUSTOMER. DIAZ EXECUTED TRANSACTIONS IN THE CUSTOMER'S ACCOUNT, WITHOUT HER PRIOR KNOWLEDGE, AUTHORIZATION OR CONSENT. THE UNAUTHORIZED TRANSACTIONS IN THE CUSTOMER'S BROKERAGE ACCOUNT AT DIAZ'S FIRM RESULTED IN MORE THAN $195,000 IN CASH THAT HE SENT TO THE CUSTOMER, WHICH SHE BELIEVED WERE DISTRIBUTIONS FROM THE COMPANY. DIAZ, ACTING OUTSIDE OF HIS EMPLOYMENT WITH HIS FIRM, PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS FOR COMPENSATION WITHOUT PROVIDING PRIOR WRITTEN OR ORAL NOTICE TO THE FIRM OF HIS PROPOSED ROLE IN, OR THE SELLING COMPENSATION THAT HE MIGHT RECEIVE FROM THE TRANSACTIONS. THE FIRM DID NOT APPROVE DIAZ'S PRIVATE SECURITIES TRANSACTIONS WITH THE CUSTOMER. DIAZ ENGAGED IN BUSINESS ACTIVITIES WITH HIS COMPANY WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO THE FIRM OR RECEIVING ITS WRITTEN APPROVAL. DIAZ WAS A MEMBER AND MANAGER OF THE COMPANY AND RECEIVED APPROXIMATELY $126,000 IN COMPENSATION AS A RESULT OF HIS BUSINESS ACTIVITY WITH IT. DIAZ SOLICITED LOANS FROM THE CUSTOMER IN THE TOTAL AMOUNT OF $87,000. DIAZ FAILED TO NOTIFY HIS FIRM OF THE LOANS THE CUSTOMER MADE TO HIM CONTRARY TO FIRM POLICY THAT PROHIBITED DIAZ FROM BORROWING FROM CUSTOMERS IN ALL CIRCUMSTANCES.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

4/30/2014

WILLFUL VIOLATION OF SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, DIAZ CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT IN CONNECTION WITH THE SALE OF A SECURITY, DURING TELEPHONE CONVERSATIONS AND WRITTEN COMMUNICATIONS, HE INTENTIONALLY OR RECKLESSLY MADE UNTRUE STATEMENTS OF MATERIAL FACT TO A CUSTOMER IN WILLFUL VIOLATION OF SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 REGARDING PROPERTIES OF A LIMITED LIABILITY COMPANY HE CONTROLLED AND INTENTIONALLY OR RECKLESSLY OMITTED TO STATE OTHER RELEVANT AND RELATED MATERIAL FACTS TO THE CUSTOMER. THE FINDINGS STATED THAT THE CUSTOMER'S INVESTMENTS IN THE COMPANY AND THE LOAN TO IT, WHICH TOTALED AT LEAST $365,000, WERE NOT PAID DIRECTLY FROM HER ACCOUNT AT DIAZ'S MEMBER FIRM. RATHER, AMOUNTS WITHDRAWN FROM HER ACCOUNT WERE TRANSFERRED TO HER CHECKING ACCOUNT AT A BANK. AT DIAZ'S REQUEST, SHE THEN WIRED THE FUNDS, COMPRISING THE INVESTMENTS AND LOAN TO THE COMPANY, TO A BANK ACCOUNT, WHICH WAS A PERSONAL BANK ACCOUNT DIAZ CONTROLLED. IN RELIANCE UPON REPRESENTATIONS DIAZ MADE, THE FUNDS THE CUSTOMER PROVIDED TO DIAZ WERE INTENDED FOR USE BY THE COMPANY FOR ITS GENERAL BUSINESS OPERATIONS. DIAZ'S BANK ACCOUNT WAS COMPRISED ALMOST ENTIRELY OF FUNDS FROM THE CUSTOMER FOR HER INVESTMENTS AND THE LOAN. THE FINDINGS ALSO STATED THAT DIAZ IMPROPERLY CONVERTED AT LEAST $126,000 OF THESE FUNDS IN HIS BANK ACCOUNT TO HIS PERSONAL USE FOR EXPENDITURES THAT DID NOT BENEFIT THE COMPANY OR THE CUSTOMER. THE FINDINGS ALSO INCLUDED THAT DIAZ EXECUTED TRANSACTIONS IN THE CUSTOMER'S ACCOUNT, WITHOUT HER PRIOR KNOWLEDGE, AUTHORIZATION OR CONSENT. THE UNAUTHORIZED TRANSACTIONS IN THE CUSTOMER'S BROKERAGE ACCOUNT AT DIAZ'S FIRM RESULTED IN MORE THAN $195,000 IN CASH THAT HE SENT TO THE CUSTOMER, WHICH SHE BELIEVED WERE DISTRIBUTIONS FROM THE COMPANY. FINRA FOUND THAT DIAZ, ACTING OUTSIDE OF HIS EMPLOYMENT WITH HIS FIRM, PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS FOR COMPENSATION WITH THE CUSTOMER WITHOUT PROVIDING PRIOR WRITTEN OR ORAL NOTICE TO THE FIRM OF HIS PROPOSED ROLE IN, OR THE SELLING COMPENSATION THAT HE MIGHT RECEIVE FROM THE TRANSACTIONS. THE FIRM DID NOT APPROVE DIAZ'S PRIVATE SECURITIES TRANSACTIONS WITH THE CUSTOMER. FINRA ALSO FOUND THAT DIAZ ENGAGED IN BUSINESS ACTIVITIES WITH HIS COMPANY OUTSIDE THE SCOPE OF HIS RELATIONSHIP WITH THE FIRM, WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO THE FIRM OR RECEIVING ITS WRITTEN APPROVAL. DIAZ'S PARTICIPATION IN THE COMPANY WAS NOT PASSIVE. DIAZ WAS A MEMBER AND MANAGER OF THE COMPANY AND RECEIVED APPROXIMATELY $126,000 IN COMPENSATION AS A RESULT OF HIS BUSINESS ACTIVITY WITH IT. IN ADDITION, FINRA DETERMINED THAT DIAZ SOLICITED LOANS FROM THE CUSTOMER, A TOTAL OF $87,000. THE LOANS WERE DIRECTED TO THE COMPANY AND TO DIAZ RESPECTIVELY, AND WERE DEPOSITED INTO HIS PERSONAL BANK ACCOUNT. DIAZ FAILED TO NOTIFY HIS FIRM OF THE LOANS THE CUSTOMER MADE TO HIM CONTRARY TO FIRM POLICY THAT PROHIBITED DIAZ FROM BORROWING FROM CUSTOMERS IN ALL CIRCUMSTANCES.