David A. Allen, of Bethel, Vermont, one of the former owners of defunct Avenir Financial Group, on January 28, 2016, was terminated from Avenir Financial Group amid allegations that he had committed funds despite not having authorization, failed to supervise, and took possession of the firm’s funds without authority.
At time tme of his termination, Allen, Avenir, and several others including Avenir CEO, Michael T. Clements. were named in a customer dispute from from October 2015 in which the customer, a Trust located Minnesota sought $148,000.00 in damages based upon allegations that Avenir effected trades without the customer’s authorization, engaging in unsuitable investment practices, generated excessive commissions, and otherwise churned the customer’s investment account. Allen and Clements appear to have been named solely in a supervisory capactity. However, SEC Form BD shows that Allen was only a passive investor in Avenir.
According to a Disciplinary Decision rendered against Avenit and Clements in September 2016, Avenir Financial Group was a financially troubled FINRA member film, and a Bull Run Capital Holdings, was holding company that owned an Avenir branch office. The Department of Enforcement brought fraud and other charges against Avenir, its Chief Executive Officer and Chief Compliance Officer, Michael Todd Clements, and one of its registered representatives, Karim Ahmed Ibrahim (also known as Chris Allen) for the fradulent offering of promissory notes.
Since 1990, Clements has been associated with nineteen (19) different broker-dealers, at least twelve of which, including the infamous Blinder & Robinson, have been expelled by securities regulators for violation of the federal securities laws or are otherwise defunct.
FINRA Public Disclosure records also reveal that on January 7, 2015, Allen, again purportedly in a supervisory capacity, became subject to another pending customer dispute, in which the customer requested $1,000,000.00 in damages again based upon allegations of unauthorized trading, churning, excessive commissions, and that failure to disclose such markups to the customer. This dispute was settled for $275,000.00.
However, in March 2017, connection with the October 2015 customer iniiated arbitratoin claim against Allen, Avenir, and several others including Avenir CEO, Michael T. Clements, after eight hearing sessions, the arbitration panel awarded damages of $250,175, including punitive damages, interest, costs and attorneys’ fees under Minnesota Law, Minn. Stat. 80A.76(b)(1) and Minn. Stat. 549.20.
Although the Arbitration claim was filed in October 2015, Avenir was expelled by FINRA and was defunct by January 2016. Accordingly, Evcryone appearing at the June 2017 and January 2017 hearings, except for Claimant’s counsel did not have lawyers and represented themselves. Avenir CEO, Michael T. Clement, appeared on behalf of Avenir. William Bernard as Trustee of the Bernard Revocable Living Trust v. Avenir Financial Group, et al., FINRA Arbitration No. 15-02744.
The FINRA Arbitration Panel assessed approximately 90% of the award for punitive damages, interest, costs and attorneys’ fees against Clement, and approximately 10% of the $250,719 Award against Allen. Since then additional customer arbitration awards have been rendered against Clement.
In any event, as set forth above, on January 28, 2016, Allen was terminated from Avenir Financial Group amid allegations that he had committed funds despite not having authorization, failed to supervise, and took possession of the firm’s funds without authority.
Allen, in a comments to his termination, states that there is no factual basis for any of the allegations in this disclosure. Allen claims he discovered fraudulent behavior and regulatory failings within the firm and asked for the resignation of my partner, the CEO and chief compliance officer, when he was immediately terminated in retaliation.
On May 26, 2016, Allen filed a arbitration claim before FINRA against Clements and Avenir for fraudulent filing of Form U5, defamation, and harassment.
One June 15, 2017, after seventeen (17) hearing sessions costing in excess of $17,000, the FINRA Arbitration Panel concluded that New York State court decisions prohibited claims for defamation stemming from Form U5 filing. The Panel did however order or at least recommend that the “Yes” answers to Allen’s Form U5 be amended that that Allen’s Reason for Termination be expunged and
changed to “Voluntary.”’ Allen v. Avenir Financial Group, , et al. FINRA Arbitration No. 16-01469 (June 15, 2017).
Perhaps more importantly, the Panel assessed $14,220.00 of the hearing costs against Avenir and Clements.
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