Cabin Securities Broker Lawrence Sheldon Steinberg Discloses $1.17 Million Customer Dispute Over Private Placement Sales

• October 14, 2026
• Cabin Securities

On August 25, 2026, a customer dispute was reported on the BrokerCheck record of Lawrence Sheldon Steinberg (CRD# 2349876) of Cabin Securities, Inc. in Pasadena, California. It alleges fraud, misrepresentation, omissions of material facts, and unsuitable recommendations in sales of Regulation D private placements from 2016 to 2019. The customers seek $1,175,546.

Broker’s History

According to his FINRA BrokerCheck report and SEC IAPD report, Steinberg has 33 years of industry experience. He has been registered with Cabin Securities, Inc. in Pasadena since December 2019 and with Cabin Advisors, LLC as an investment adviser representative since October 2022. His prior broker-dealer registrations include:

• Newbridge Securities Corporation (Pasadena, CA), May 2014 to October 2016
• Berthel, Fisher & Company Financial Services, Inc. (Pasadena, CA), October 2009 to January 2014
• LPL Financial Corporation (Scottsdale, AZ), September 2009 to November 2009
• Associated Securities Corp. (Scottsdale, AZ), December 2008 to September 2009
• FSC Securities Corporation (Pasadena, CA), 1995 to 2008
• SunAmerica Securities, Inc. (Phoenix, AZ), 1993 to 1995

BrokerCheck reports five disclosure events: two customer disputes, two employment separations after allegations, and one financial matter.

Pending Customer Dispute (August 25, 2026)

According to BrokerCheck, the complaint concerns Steinberg’s sales of Regulation D private placements from 2016 to 2019. It was asserted against the firm and alleges fraud, misrepresentation, omissions of material facts, unsuitable recommendations, breach of contract, and breach of fiduciary duty. The damages requested are $1,175,546.

Steinberg’s comment states that the investor alleged the firm failed to conduct due diligence and did not adequately warn of the investments’ risks. He states that the firm conducted robust due diligence and warned of the risks. He also states that the investor worked with a licensed tax professional on the investment’s features, and that the investor still owns the interests and has not realized losses. The dispute is pending, and its allegations have not been proven.

Prior Terminations and Customer Dispute

• Newbridge Securities (October 2016, discharged): The firm cited a violation of firm policy regarding his misrepresentation related to a third-party vendor. Steinberg’s comment states that the firm’s compliance officers did not understand the vendor relationship, which the firm itself had introduced, and that the firm had no written guidelines for it.
• Berthel Fisher (January 2014, discharged): The firm alleged that he misrepresented that a lien had been paid. It also alleged that he failed to inform the firm he had borrowed money from a client and that he held customer funds.
• Customer dispute (2016, settled for $11,800): Clients alleged that Steinberg sold them AIG annuities with single coverage rather than the joint survivorship coverage they had requested. Steinberg’s comment categorically denies wrongdoing and states he settled in mediation for less than the cost of arbitration.

Settlements are not admissions of wrongdoing.

Applicable FINRA Rules and Legal Standards

Regulation D private placements are exempt from SEC registration, so investors rely on the selling broker-dealer’s investigation of the issuer. FINRA has long required firms to conduct a reasonable investigation before recommending a private placement. In Regulatory Notice 23-08, FINRA reminded firms that this investigation must be independent and must address red flags. For sales before June 30, 2020, FINRA Rule 2111 required that recommendations be suitable for the customer. Since then, Regulation Best Interest has required that they be in the retail customer’s best interest. Misrepresenting or omitting material risks may violate the antifraud provisions and FINRA Rule 2020.

FINRA Regulatory Notice 10-22 (April 20, 2010) reminds broker-dealers that recommending a Regulation D private placement requires a reasonable investigation of both the issuer and the securities. The duty comes from the federal securities laws and FINRA’s suitability, advertising and supervision rules. The required depth of that investigation depends on the firm’s affiliation with the issuer, its role in the offering, and whether the buyers are retail or institutional. Quoting Hanly v. SEC, the Notice says a firm “may not rely blindly upon the issuer,” whether on offering documents, management’s representations or issuer’s counsel’s due diligence. Firms must investigate each offering separately, even a repeat offering by the same issuer. At minimum, the investigation must cover:

• the issuer and its management
• its business prospects
• its assets
• the claims being made
• the intended use of proceeds

Firms must follow up on red flags, such as an issuer’s refusal to provide information, unusually high promised returns, or the absence of a private placement memorandum. Affiliated firms must make sure conflicts do not compromise the independence of the investigation. A firm that lacks essential information must disclose that gap and the risk it creates. The Notice also ties these duties to:

• reasonable-basis and customer-specific suitability under then-NASD Rule 2310, noting that accredited-investor status alone is not enough
• written supervisory procedures under then-NASD Rule 3010
• documentation of the investigation’s process and results

What This Means for Investors

Private placements are illiquid, and their value can be hard to determine until an investment is sold or fails. An investor who still holds the interests may still have suffered losses, through impaired value, suspended distributions, or an inability to exit. Investors who purchased Regulation D offerings through Steinberg may have claims for misrepresentation, unsuitable investments, breach of fiduciary duty, and failure to supervise. Our page on private placement fraud discusses these claims.

The Wolper Law Firm, P.A. represents investors throughout the country in securities arbitration and litigation, typically on a contingency fee basis. Matt Wolper, the firm’s managing principal, is a trial attorney who has handled more than 1,000 securities cases. If you invested in a private placement through Lawrence Steinberg, contact us for a free consultation at 800.931.8452 or mwolper@wolperlawfirm.com.