Mcdonald Partners Llc

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REPORT CERTAIN MUNICIPAL SECURITIES TRANSACTIONS TO THE MSRB'S REAL-TIME TRANSACTION REPORTING SYSTEM (RTRS). THE FINDINGS STATED THAT THE FIRM FAILED TO REPORT BOTH THE PURCHASES INTO ITS RISKLESS PRINCIPAL ACCOUNT AND THE SALES TO ITS INVESTMENT ADVISER CLIENTS OF CERTAIN RISKLESS PRINCIPAL TRANSACTIONS. THE FINDINGS ALSO STATED THAT THE FIRM CONDUCTED A SECURITIES BUSINESS WHILE FAILING TO MAINTAIN ITS REQUIRED MINIMUM NET CAPITAL BY OVERSTATING THE ALLOWABLE PORTION OF RECEIVABLE COMMISSIONS FROM THE SALE OF TWO UNREGISTERED OFFERINGS AND FAILING TO RECORD A HAIRCUT DEDUCTION IN A MONEY MARKET MUTUAL FUND. THE FINDINGS ALSO INCLUDED THAT THE FIRM PREPARED AN INACCURATE GENERAL LEDGER, TRIAL LEDGER, AND NET CAPITAL COMPUTATION. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $22,500. PAID IN FULL ON 3/22/19. Summary: ALL CONDITIONS HAVE BEEN MET

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO CONDUCT REASONABLE DUE DILIGENCE OF A PRIVATE-PLACEMENT OFFERING. THE FINDINGS STATED THAT THE FIRM AGREED TO CONSIDER BECOMING THE PLACEMENT AGENT FOR A PRIVATE-PLACEMENT OFFERING IN AN INVESTMENT FUND THAT WAS FORMED FOR THE PRIMARY PURPOSE OF INVESTING IN A CANNABIS COMPANY, DESPITE SUSPENDING CONSIDERATION OF NEW PRIVATE PLACEMENT OFFERINGS AFTER IDENTIFYING A NEED FOR IMPROVEMENT IN ITS RELATED SUPERVISORY PROCEDURES. THE ISSUER WAS INITIALLY CAPITALIZED BY SHORT-TERM LOANS FROM TWO OF THE CANNABIS COMPANY'S CO-FOUNDERS FOR A TOTAL OF $4 MILLION, AND THE PROCEEDS OF THESE LOANS WERE USED TO PURCHASE CONVERTIBLE DEBT IN THE CANNABIS COMPANY. THE FIRM ONLY REVIEWED THE LIMITED DOCUMENTS AND INFORMATION THAT THE ISSUER PROVIDED AND DID NOT VERIFY THAT THE ISSUER HAD PURCHASED CONVERTIBLE DEBT FROM THE CANNABIS COMPANY, AND ALSO FAILED TO REVIEW THE LOANS THAT FINANCED THOSE PURCHASES OR IDENTIFY THE LENDERS. IN ADDITION, ALTHOUGH THE SUCCESS OF THE OFFERING WOULD PRIMARILY BE BASED ON THE CANNABIS COMPANY'S PERFORMANCE, THE FIRM DID NOT REASONABLY CONSIDER SERIOUS CONCERNS ABOUT THE CANNABIS COMPANY'S BUSINESS PROSPECTS THAT IT PREVIOUSLY IDENTIFIED. THE FIRM ALSO FAILED TO IDENTIFY AND INVESTIGATE POTENTIAL RED FLAGS ASSOCIATED WITH THE PRIVATE PLACEMENT MEMORANDUM FOR THE OFFERING. NONETHELESS, THE FIRM APPROVED THE SALE OF THE OFFERING TO FIRM CUSTOMERS AND ACTED AS THE SOLE PLACEMENT AGENT SELLING INTERESTS IN THE OFFERING. THE FIRM RECOMMENDED THAT CUSTOMERS PURCHASE A TOTAL OF $4.25 MILLION IN INTERESTS IN THE OFFERING AND THE ISSUER PAID THE FIRM $170,000 IN COMMISSIONS FOR THESE SALES. THE FINDINGS ALSO STATED THAT THE FIRM WILLFULLY VIOLATED RULE 10B-9 OF THE SECURITIES EXCHANGE ACT OF 1934 BECAUSE THE OFFERING DID NOT SPECIFY AN END DATE FOR THE CONTINGENCY AND USED NON-BONA FIDE FUNDS TO SATISFY THE CONTINGENCY. THE FIRM PROVIDED EACH OF THE CUSTOMERS WHO INVESTED IN THE OFFERING WITH A COPY OF THE PRIVATE-PLACEMENT MEMORANDUM, WHICH STATED THAT NO SHARES IN THE OFFERING WOULD BE ISSUED UNLESS AND UNTIL THE ISSUER RECEIVED A MINIMUM OF $5 MILLION IN AGGREGATE CAPITAL COMMITMENTS. THE MEMORANDUM DID NOT, HOWEVER, SPECIFY A DATE BY WHICH THAT CONTINGENCY HAD TO BE MET. THE FIRM ALSO TACITLY PERMITTED THE ISSUER TO USE NON-BONA FIDE FUNDS TO SATISFY THE CONTINGENCY. WHEN THE FIRM HAD SOLD ONLY $4.4 MILLION OF THE OFFERING, ONE OF THE FIRM'S REGISTERED REPRESENTATIVES INFORMED THE FIRM THAT TWO INDIVIDUALS HAD INVESTED A TOTAL OF $700,000 IN THE OFFERING IN THE FORM OF CONVERTED DEBT, WHICH PURPORTEDLY SATISFIED THE ISSUER'S CONTINGENCY PROVISION. THE FIRM DID NOT REQUEST OR RECEIVE ANY INFORMATION ABOUT THESE OTHER INVESTORS, AND THUS DID NOT LEARN THAT THE INVESTMENTS WERE NOT BONA FIDE SALES. THE INVESTORS WERE AFFILIATES OF THE ISSUER - THE TWO CO-FOUNDERS OF THE CANNABIS COMPANY WHO HAD LOANED $4 MILLION TO THE ISSUER. MOREOVER, THESE TWO INVESTORS WERE ALLOWED TO CONVERT THEIR DEBT RATHER THAN INVEST NEW FUNDS, AND THE TERMS OF THEIR INVESTMENT IN THE OFFERING WERE MATERIALLY DIFFERENT FROM (AND MORE FAVORABLE THAN) THE TERMS OFFERED IN THE PRIVATE-PLACEMENT MEMORANDUM TO THE FIRM'S CUSTOMERS. BECAUSE THE FIRM FAILED TO OBJECT TO THE USE OF NON-BONA FIDE INVESTMENTS, THE ISSUER DISBURSED $4,172,794 IN INVESTOR FUNDS, INCLUDING $170,000 TO THE FIRM. THE FINDINGS ALSO INCLUDED THAT THE FIRM CONDUCTED A SECURITIES BUSINESS WHILE FAILING TO MAINTAIN ITS MINIMUM NET CAPITAL REQUIREMENT. THE FIRM WAS BELOW ITS MINIMUM NET CAPITAL REQUIREMENT BY APPROXIMATELY $180,000 DUE TO THE FIRM IMPROPERLY TREATING A RECEIVABLE FROM ITS OWNER, WHICH THE FIRM CHARACTERIZED AS A CAPITAL INFUSION INTENDED TO PREVENT THE FIRM FROM GOING UNDER ITS MINIMUM NET-CAPITAL REQUIREMENT, AS ALLOWABLE. BECAUSE THE $225,000 RECEIVABLE WAS MERELY A BOOK ENTRY AND NOT AN ACTUAL CASH DEPOSIT, HOWEVER, IT WAS NON-ALLOWABLE. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $100,000, ORDERED TO PAY $170,000, PLUS INTEREST, IN PARTIAL RESTITUTION TO CUSTOMERS, AND REQUIRED TO CERTIFY THAT IT WILL NOT RESUME SALES OF PRIVATE-PLACEMENT OFFERINGS UNLESS AND UNTIL IT HAS IMPLEMENTED SUPERVISORY SYSTEMS AND WSPS FOR DUE DILIGENCE ON PRIVATE-PLACEMENT OFFERINGS THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE EXCHANGE ACT AND FINRA RULES. THE SETTLEMENT INCLUDES A FINDING THAT THE FIRM WILLFULLY VIOLATED RULE 10B-9 OF THE SECURITIES EXCHANGE ACT OF 1934. Summary: ALL CONDITIONS HAVE BEEN MET.

Allegations: FAILED TO REGISTER IT'S AGENTS AND BRANCH IN THE STATE Status: Final Sanction Detail: FINE OF $15,000.00 ORDER PAID BY THE STATE HAS BEEN COMPLETED. Summary: FINE OF $15,000.00 ORDER PAID BY THE STATE HAS BEEN COMPLETED.

Allegations: IN SEPT. 2013 AND JULY 2014, MCDONALD ACTED AS A PLACEMENT AGENT IN CONNECTION WITH 2 SEPARATE CONTINGENT OFFERINGS OF SECURITIES, ISSUED BY COMPANIES AFFILIATED WITH THE FIRM. IN THE FIRST OFFERING, MCDONALD RELEASED INVESTORS' FUNDS FROM ESCROW AFTER HAVING USED AN INTERIM LOAN TO SATISFY A PORTION OF THE CONTINGENCY AMOUNT. BY ENGAGING IN SUCH CONDUCT, THE FIRM WILLFULLY VIOLATED SECURITIES EXCHANGE ACT RULE 10B-9 AND FINRA RULE 2010. IN THE 2ND OFFERING, THE FIRM RELEASED INVESTORS' FUNDS FROM ESCROW PRIOR TO MEETING THE OFFERING'S STATE MINIMUM CONTINGENCY. THIS CONDUCT WAS ALSO A WILLFUL VIOLATION OF SEA RULE 1OB-9 AND FINRA RULE 2010. PRIOR TO THE CONTINGENCY OCCURRING, IN VIOLATION OF SEA RULE 15C2-4 AND FINRA RULE 2010; AND 2)CIRCULATED A COMMUNICATION TO THE PUBLIC THAT MISSTATED THE CONTINGENCY AMOUNT IN THE OFFERING MEMORANDUM IN VIOLATION OF FINRA RULES 2210 (D)(L)(B) AND 2010. FURTHER, BETWEEN SEPT. 2013 AND FEB. 2015, THE FIRM FAILED TO REPORT CERTAIN MUNICIPAL SECURITIES TRANSACTIONS TO THE MUNICIPAL SECURITIES RULEMAKING BOARD IN VIOLATION OF MSRB RULE G-14. Status: Final Sanction Detail: $50,000 PAID IN FULL 2/21/2018 Summary: ALL CONDITIONS HAVE BEEN MET.

Allegations: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT"), SECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") AGAINST MCDONALD PARTNERS, LLC ("RESPONDENT"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF RESPONDENT'S ROLE AS PLACEMENT AGENT FOR PRIVATE SECURITIES OFFERINGS CONDUCTED BY TWO POOLED INVESTMENT VEHICLES THAT RESPONDENT ADVISED (THE "PIVS"). THOSE PIVS OFFERED AND SOLD SECURITIES TO RAISE BRIDGE FUNDING FOR THE CONSTRUCTION OF A RESORT IN MONTENEGRO. INVESTOR MONIES RAISED THROUGH THESE OFFERINGS WERE TO BE USED TO PURCHASE DEBT IN A MONTENEGRIN ENTITY THAT WAS TO CONSTRUCT THE RESORT. BETWEEN SEPTEMBER 2013 AND CONTINUING THROUGH JANUARY 2017, RESPONDENT OFFERED AND SOLD MORE THAN $14 MILLION IN SECURITIES ISSUED BY THE PIVS TO INVESTORS LOCATED IN THE UNITED STATES, INCLUDING BOTH ITS BROKERAGE CUSTOMERS AND ITS ADVISORY CLIENTS. IN OCTOBER 2016, RESPONDENT BECAME AWARE OF ALLEGATIONS THAT ITS POINT PERSON AT THE MONTENEGRIN ENTITY HAD MISAPPROPRIATED $488,331 OF INVESTOR FUNDS BY MISUSING A DEBIT CARD BELONGING TO THAT ENTITY TO PAY FOR CERTAIN PERSONAL EXPENSES. ACCORDING TO RESPONDENT, AFTER BEING CONFRONTED WITH THE ALLEGATIONS THAT THIS INDIVIDUAL HAD MISAPPROPRIATED FUNDS FROM THE MONTENEGRIN ENTITY, HE CONCEDED THAT HE WAS NOT ENTITLED TO CERTAIN OF THE FUNDS ALLEGED TO HAVE BEEN MISAPPROPRIATED. ACCORDINGLY, AFTER NEGOTIATION, THE INDIVIDUAL AGREED TO REPAY APPROXIMATELY $335,000 THAT HE HAD ALLOCATED TO PERSONAL EXPENSES. RESPONDENT DID NOT DISCLOSE THE MISAPPROPRIATION TO EXISTING INVESTORS IN OCTOBER 2016. RESPONDENT THEN RAISED APPROXIMATELY $1.5 MILLION IN ADDITIONAL FUNDS FROM EXISTING SECURITY HOLDERS AND NEW INVESTORS, INCLUDING BROKERAGE CUSTOMERS AND ADVISORY CLIENTS, IN EARLY 2017 WITHOUT DISCLOSING THE MISAPPROPRIATION TO THOSE INVESTORS. IN ADDITION, FOR THE PERIOD DECEMBER 31, 2014 THROUGH DECEMBER 31, 2018, RESPONDENT FAILED EITHER TO PROVIDE INVESTORS IN THE PIVS WITH AUDITED FINANCIAL STATEMENTS OR TO RETAIN AN INDEPENDENT PUBLIC ACCOUNTANT TO CONDUCT SURPRISE EXAMINATIONS OF THE BOOKS OF THOSE ENTITIES. BY THIS CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 17(A)(2) AND (3) OF THE SECURITIES ACT AND SECTIONS 206(2) AND 206(4) OF THE ADVISERS ACT AND RULES 206(4)-2 AND 206(4)-8 THEREUNDER. Status: Final Sanction Detail: THE FIRM SHALL CEASE AND DESIST; IS CENSURED; SHALL PAY DISGORGEMENT OF $37.031.25 AND PREJUDGMENT INTEREST OF $7,651.86; SHALL PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $150,000; AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER. Summary: ALL CONDITIONS HAVE BEEN MET.