A prominent Charlotte, N.C.-based broker will pay more than $1 million in fines after a FINRA arbitration panel determined he committed securities fraud, according to published reports and documents from the regulatory agency.
According to The Charlotte Observer, James Heafner was a prominent financial advisor in the area and often appeared on local television stations to offer financial advice. According to BrokerCheck, Heafner had been a broker since 2004, and has been affiliated with Taylor Capital Management since 2011.
However, in February, five local retirees filed a statement of claim with FINRA accusing Heafner of violating federal securities law, according to the arbitration award document. WBTV reported that Heafner had invested his clients’ money in 1 Global Capital, but that company found itself as the target of an SEC complaint last August. The SEC charged the Florida-based cash advance company with defrauding at least 3,400 investors, one-third of whom invested their retirement savings, according to the complaint.
The SEC stated much of investors' funds went to supporting the “lavish personal spending” of CEO Carl Ruderman and to financing two of his consumer-loan companies. In all, the company has raised more than $287 million in unregistered securities since 2004 with a network that included barred brokers, according to the SEC. The Observer reported between July and December 2017, Heafner convinced his accusers to cumulatively invest $595,733 in 1 Global Capital, with one victim losing $178,000 in retirement funds.
In arbitration, FINRA awarded Heafner’s accusers approximately $470,000 in cumultative compensatory damages and $400,000 in cumulative punitive damages. With attorneys' fees and other fines, the total award against Heafner and Taylor Capital Management totaled about $1.03 million.
“It breaks my heart that some of my clients will lose money due to my recommendation,” Heafner said in a statement to the Observer. “I wish I had never heard of 1 Global, but hindsight is 20/20.”
According to the SEC complaint, 1 Global filed for bankruptcy and Ruderman retired as CEO in July 2018, one month before the complaint. According to WBTV and Goodman & Nekvasil, P.A. (the law firm that represented the five retirees), Heafner sent clients a letter around the time of 1 Global’s bankruptcy that reportedly stated, “I could easily retire and move to an island, but our job is to try and do our best for you, knowing that life is full of perils.”
According to WBTV and the firm, at around that same time Heafner announced his retirement and moved to Puerto Rico.