Articles Posted in Arbitration Award

Zabala Farms Group LLC Managers Hit with $3.8 Million Judgment

Zabala Farms Group, LLC managers Anthony Johnson and Jeremy Johnson were found liable to an investor, and ordered to pay him $3.8 million in damages for selling unqualified securities in the form of membership interests in GPA Enterprises, LLC and Target Equity, LLC.

On October 28, 2019 Judge William Barry presiding in Dept. S302 of the Riverside Superior Court (Murrieta branch) found in favor of the Plaintiff, and against Anthony Johnson, Jeremy Johnson, GPA Enterprises LLC and Target Equity LLC. The Plaintiff filed his complaint on May 29, 2019 asserting claims for violations of the California Securities Law of 1968, including claims for selling unqualified securities and selling securities via omissions of material fact. Judgment was entered by the clerk on November 4, 2019 in the amount of $3,829,833.

Carlos Isaac ordered to pay investor million dollar judgment.

On January 27, 2020 a Clark County Nevada District Court Judge issued a judgment in the amount of $1,054,309 against Carlos Isaac III, the manager of two Nevada limited liability companies; Mackiernan, LLC and C13 Holding, LLC.  Mr. Isaac used those companies to raise money from investors to purportedly assist with reconstruction efforts in Texas after Hurricane Harvey.

Carlos Isaac is a former financial advisor who worked for AR Global and Boston Financial. It was there that he met the client that would loan him the money for his two LLC ventures.  Mr. Isaac prepared promissory notes, which Plaintiff alleged were unregistered securities sold in violation of NRS 90.460.  Plaintiff purchased the promissory notes which provided for the payment of 8.5- 9% monthly interest, with a return of principal three years from initial investment.  The investments were made in 2016 and 2017, and as a result of the nonpayment of interest beginning in March, 2019, all three notes went into default.  Plaintiff sent demand letters to Carlos Isaac demanding the return of his principal, but Mr. Isaac never responded. Instead, he closed up his business operations in Las Vegas, and is believed to have relocated to Texas.

Allegis Investment Advisors ordered to pay investors $911,000.

On January 8, 2018 an American Arbitration Association panel issued a $911,000 binding arbitration award to clients of the Law Office of David Liebrader.  The award stems from options trading losses losses suffered by the clients in 2015.  The award of $911,000 was issued against Allegis Investment Advisors, a registered investment advisor based in Boise, Idaho.  Allegis offered a complex options trading strategy to its clients known as a net credit spread strategy.

In August 2015 this strategy failed spectacularly, causing over $39 million in losses to Allegis’ clients.  The Law Office of David Liebrader filed a AAA arbitration against Allegis Investment Advisors on behalf of six clients who lost a combined $636,000.  In December 2017 an arbitration hearing was held over seven days in Salt Lake City, chaired by arbitrator James Holbrook.

Hilliard Lyons ordered to pay $560,000 FINRA arbitration award

In September, 2017, a FINRA arbitrator panel sitting in St. Louis, Missouri issued a $550,000 binding arbitration award against brokerage firm Hilliard Lyons, a FINRA registered broker dealer.  The award included $100,000 in punitive damages pursuant to State Farm v. Campbell, a 2003 United States Supreme Court case.  The panel also added nearly $20,000 in recoverable costs.

The underlying matter involved an investment in Breitburn Energy, an oil and gas operator that filed for bankruptcy in 2016.  The customers brought claims for suitability, alleging that the account was over concentrated in Breitburn shares, which resulted in substantial losses.  FINRA member firms are obligated to properly diversify customer accounts, and to make recommendations which are consistent with a client’s risk tolerances and investment objectives.

Jacqueline Georgio, Paul Howard, Bryan Perderson and RBC Capital Markets hit with large FINRA Award

In August, 2017, a FINRA arbitration panel sitting in Cheyenne, Wyoming issued a $569,000 binding arbitration award against Jacqueline Georgio (aka Jacqueline Westover) Paul Howard, Bryan Pederson and RBC Capital Markets.  The award also provided for 10% interest on the award until paid in full.

The underlying matter involved claims that Respondents negligently caused the Claimant to lose his retirement benefits by transferring money out of a qualified retirement plan.  As a result of the transfer, Claimant lost a guaranteed income benefit of $3200 a month for life from the Wyoming state pension system.

In July, 2017, a FINRA arbitrator panel sitting in New York, NY issued a $2.6 million binding arbitration award against Northeast Securities a FINRA registered broker dealer.  The award was joint and several against Northeast Securities and registered reps Stephen Perrone, Diane Hawkins and Jonathan Zucker. The award includes nearly $900,000 in pre award interest and reimbursement for close to $34,000 in expert witness costs.  Perrone, Hawkins and Zucker’s requests to expunge the claim from the CRD system was denied by the panel.

The underlying matter involved corporate bonds, and Claimant asserted claims for breach of fiduciary duty, negligence, churning, misrepresentations and violations of FINRA rules. During the pendency of the case, the Claimant filed a request with the panel to make a disciplinary referral to FINRA for Respondents alleged refusal to turn over presumptively discoverable telephone records that could have aided Claimant’s case.  The panel denied the request to make the disciplinary referral.

Improbably, despite making such a large award on behalf of the Claimant, the panel split the arbitration hearing session fees 50-50, requiring Claimant to pay $13,500 to FINRA.

In July, 2017, a FINRA arbitrator panel sitting in Los Angeles, CA issued a $1,797,100 binding arbitration award against Wedbush Securities a FINRA registered broker dealer.  The award included nearly $1.2 million in punitive damages pursuant to the California Elder Abuse and Dependent Adult Act.  The panel also added nearly $300,000 in attorney’s fees.

The underlying matter involved structured products and steepeners, synthetic securities that allow speculators to bet on the direction of interest rates.  The panel also made an affirmative finding that Wedbush Securities  and broker Mark Augusta engaged in unauthorized trading in the Claimant’s account.  Among the securities at issue were Citigroup FDG Medium Term, Lloyds TSB Bank Steepner Note, SG Structured Prods Medium Term and Citibank NA Principal Protected MLCD Quarterly Notes

After a seven day arbitration hearing over March and May, 2017, the arbitrators rendered their decision, and awarded the Claimant $250,000 in compensatory damages, with the remainder being commission disgorgement, punitive damages, attorney’s fees and costs. The panel found Wedbush solely liable, based on Wedbush’s  obligation to indemnify Mark Augusta, and no portion of the award is owed by Augusta.  The panel, nevertheless found that both Wedbush Securities and Mark Augusta engaged in “improper conduct.” Augusta left Wedbush in May, 2015 after four years with the firm.  He is now registered with Hilltop Securities in Del Mar, California.

In May, 2017, a FINRA arbitrator panel sitting in Los Angeles issued a $1,378,800 binding arbitration award against Charles Laverty in a case involving personal loans that the clients made to Laverty.

The underlying matter involved allegations that Charles Laverty breached his fiduciary duty by soliciting a loan in violation of firm and industry rules.  Allegations were also raised concerning the mismanagement of the account.  Among the claims made were those for fraud, violations of state and federal securities laws and violations of FINRA’s rules.

After a twelve day arbitration hearing stretching from June, 2016 to April, 2017, the arbitrators rendered their decision and awarded the Claimant $1,378,800 in damages.

LPL Financial hit with $160,000 FINRA arbitration award.

In June, 2017, a FINRA arbitrator panel sitting in San Francisco issued a $160,000 binding arbitration award against LPL Financial in a case involving VIX derivative securities.

The VIX is a measure of the expected volatility in the stock market, specifically the S&P 500.  The VIX serves as a barometer of investor sentiment, and it is used as a tool to hedge against market volatility.  Among the ways to benefit from the rise and fall of the VIX index is buy purchasing or selling VIX option and futures. This can also be done via fund shares or exchange traded notes.

Award against Network 1 Financial broker Shane Melito

In May, 2017, a FINRA arbitrator sitting in Los Angeles, CA issued a $51,000 binding arbitration award against Shane Melito, a registered representative with Network 1 Financial Securities.

The underlying matter involved allegations that Shane Melito made unsuitable investments and breached his fiduciary duty to his customer.  Claims of excessive commissions, excessive trading and over concentration were made by the Claimant.

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