“Ceros failed to terminate the Offerings and promptly return investor funds when there were material changes to the terms of the Offerings. Therefore, Ceros willfully violated Exchange Act Rule 10b-9 and violated FINRA Rule 2010.”

💡 This finding establishes that Ceros knowingly broke the law designed to protect investors from having offering terms changed mid-stream.

“The original private placement memorandum (PPM) for Offering A, dated May 2022, required a $10 million minimum contingency by August 12, 2022, and set a share price of $2.994. Later in May 2022, after raising $3.5 million, the issuer amended the PPM to reduce the minimum contingency to $6.5 million and reduce the price per share to $2.176.”

💡 Early investors paid a higher price and expected a higher minimum threshold; both protections were stripped away without refunds.

“The original PPM for Offering B, dated June 2022, required a $10 million minimum contingency by December 29, 2022. In August 2022, after raising approximately $179,000, the issuer amended the PPM and eliminated the minimum contingency.”

💡 The minimum contingency signals market interest and fair pricing; removing it entirely deprives investors of that validation.

“Investors cannot waive this requirement by affirmatively consenting to the changes, except to extend the termination date of the offering.”

💡 Even if investors said they agreed to the changes, federal law still required Ceros to terminate and refund.

“In 2022 and 2023, Ceros’ WSPs concerning contingency offerings inaccurately stated the requirements of Exchange Act Rule 10b-9. For example, the WSPs provided that should there be a material change in the terms of an offering, investors should be provided supplements detailing the changes.”

💡 The firm’s own compliance manual told staff to do the wrong thing, ensuring violations would be repeated.

“During 2022 and 2023, private placements were a majority of the firm’s revenue.”

💡 Ceros earned most of its income from an activity it failed to supervise properly, showing profit mattered more than compliance.

“Respondent understands that this settlement includes a finding that it willfully violated Rule 10b-9 of the Securities Exchange Act of 1934 and that under Article III, Section 4 of FINRA’s By-Laws, this makes Respondent subject to a statutory disqualification with respect to membership.”

💡 The willful designation means FINRA found Ceros knew or should have known it was breaking the law.

“Respondent specifically and voluntarily waives any right to claim an inability to pay, now or at any time after the execution of this AWC, the monetary sanction imposed in this matter.”

💡 Ceros acknowledged it can afford the $90,000 fine, suggesting the penalty is not a meaningful financial burden.

“Respondent accepts and consents to the following findings by FINRA without admitting or denying them.”

💡 Standard settlement language that lets the firm avoid a public admission of wrongdoing.

“While not a guarantee, satisfaction of the minimum contingency indicates to investors that the offering was priced fairly.”

💡 The minimum threshold serves as a red flag if the market does not believe in the deal; removing it hides that warning.

“This matter originated from an examination by FINRA’s Corporate Financing Department.”

💡 The firm did not self-report; regulators found the violations during a routine exam.

“An undertaking that, within 60 days of the date of the notice of acceptance of this AWC, a member of Respondent’s senior management who is a registered principal of the firm shall certify in writing that, as of the date of the certification, the firm has remediated the issues identified in this AWC.”

💡 The firm must fix its procedures within 60 days, but this modest deadline and certification process impose little cost.