TAMPA, Fla., Feb. 03, 2017 (GLOBE NEWSWIRE) -- Goodman & Nekvasil, P.A., announces they have won a FINRA arbitration award against Source Capital Group, Inc. ("Source Capital") on behalf of an 88 year old retiree from St. Simons Island, Georgia, and a retired couple from Yorkville, Georgia.
William B. Lashlee and Keith and Joyce A. McCrea alleged that in 2012, they were sold unregistered and unsuitable investments in IPG stock by Joseph S. Hooper ("Hooper"), a Source Capital representative. Lashlee invested $220,000 and the McCreas invested $590,000, for a total investment of $810,000 in IPG. IPG filed for bankruptcy only months later, namely in January 2013, and their entire investment was lost.
These investors alleged that Source Capital negligently supervised Hooper. The evidence at the arbitration hearing showed that Hooper was assigned to a Bowling Green, Kentucky, branch office of Source Capital, but the manager of that office was never told that he was responsible for supervising Hooper and never supervised Hooper. The hearing evidence also included findings by FINRA that Source Capital negligently supervised this Bowling Green, Kentucky, branch office during that period.
After a week-long hearing on December 6 - 9, 2016, a Jacksonville, Florida, arbitration panel agreed with these investors. The panel awarded Lashlee and the McCreas their out-of-pocket losses of $810,000, and tacked on prejudgment interest of $66,989.04 for Lashlee and $80,239.73 for the McCreas. The panel also awarded $20,000 in sanctions for Source Capital's violation of panel discovery orders, and $24,630.36 in costs. Source Capital was also ordered to pay $250,000 in attorneys' fees.
"This award shows that arbitration panels will make broker-dealers pay when the evidence shows a complete breakdown of supervision," said Kalju Nekvasil, Esq., of Goodman & Nekvasil, P.A. According to Nekvasil, the claimants' Clearwater, Florida, attorney, brokerage firms must investigate red flags and cannot rely on the advisor to disclose his misconduct to them. "FINRA has long rejected the 'ostrich defense,'" said Nekvasil.