An 80-year-old retired secretary won a Financial Industry Regulatory Authority arbitration case against her broker, who, she claims, misled her on risky oil and gas investments. She was awarded full restitution plus interest. A FINRA arbitrator ruled that James M. Earl, a broker for RBC Capital Markets, the U.S. broker/dealer arm of Royal Bank of Canada, consistently violated FINRA rules and Florida state law.
Claimant Sonya Khaleel filed the dispute with FINRA on Nov. 7, 2018, and was represented by the law firm of securities fraud attorney Mark A. Tepper. Tepper’s firm alleged that Earl misled Khaleel about the risk to her irreplaceable funds. Earl claimed the funds were in good investments, but he put them into high-risk unsecured senior notes from Linn Energy and BreitBurn Energy Partners.
RBC Capital Markets was ordered to pay $50,000 to Khaleel, in addition to 6.1% of interest on the total from May 2016 through the decision date. In addition, RBC has to pay all attorney fees and Khaleel’s filing fee to FINRA. A spokeswoman for RBC Wealth Management, a division of RBC Capital Markets, took issue with the ruling, arguing market forces beyond the firm's control were to blame.
"RBC Wealth Management is deeply committed to careful management of the wealth clients entrust to us. We are disappointed in the arbitrator’s decision and disagree with the claims brought forth in this case," she said. "It is important to note that the client’s accounts were profitable and that economic and market conditions caused the market value of some of Ms. Khaleel’s securities to decline."
Last week, Tepper’s firm also filed a claim against global financial firm UBS, asserting that a broker for the firm changed the risk profile of a Georgia couple from moderate to “aggressive high-risk” in order to hide high-risk recommendations being made in the couple’s accounts. In January, the firm also represented a Florida couple who filed a claim against Tampa, Fla.-based brokerage firm Calton & Associates, asserting that a broker at the firm created a fictional investment profile on behalf of the couple in order to further his own financial interests.