FSC Securities Corp. of Atlanta, Georgia, a FINRA member brokerage firm and investment advisor firm registered with the SEC, is responsible for paying eight investors an award collectively totaling more than $1.2M via a FINRA’s arbitration panel decision after claimants alleged violations of FINRA Conduct Rule 3010, respondent superior/agency by estoppel, and violations of the Georgia Securities Act of 1973 and/or Georgia Uniform Securities Act, all in connection with FINRA’s allegations that the firm failed to supervise unnamed brokers in the fraudulent sale of securities as part of a Ponzi scheme. FINRA Dispute Resolution Arbitration No. 14-02355 (Aug. 11, 2015).
FINRA Dispute Resolution Arbitration Award
According to the FINRA Dispute Resolution Arbitration Award, two of the three arbitrators concurred with the decision, while the presiding chairperson dissented. The award of $1.28M consisted of compensatory damages. Punitive damages and attorney fees were denied.
John Chapmen, one of the claimant’s attorneys, claimed Aubrey Lee Price (one of the unnamed brokers) concocted a scheme along with 2 FSC brokers that compelled investors to invest in a PFG fund prior to Price’s departure from FSC in 2008. The FBI has alleged that Price had begun to make risky investments after his departure from FSC Securities back in January of 2008. According to the FBI, Mr. Price “went from a devout Christian minister and trusted financial advisor to a schemer who wiped out many of his client’s life savings and then faked his own death to avoid taking responsibility for what he had done.”
FINRA Public Disclosure Records
Public disclosure records reveal that FSC Securities Corp. has been subject to 45 disclosure events, 16 of which included FSC having to pay arbitration awards for misconduct including breach of fiduciary duty, misrepresentation, unsuitable transactions, unauthorized transactions, and failure to supervise.
Also according to FINRA’s BrokerCheck, Aubrey Lee Price has been subject to 4 disclosure events. On September 22, 2003, a claimant was awarded $14,350.00 after claiming Price made unsuitable recommendations and engaged in unauthorized and excessive trading and breach of fiduciary duty.
Court Order Obtained by SEC
On July 2, 2012, the SEC announced that it obtained a court order freezing Price’s assets after Price was alleged to have gone into hiding after orchestrating a $40M investment fraud. SEC Litigation Release 22409 (July 3, 2012). According to the Release, the SEC alleged that Price raised money from over 100 investors, primarily from Georgia and Florida, by selling shares in an unregistered investment fund that Price was managing. The SEC further alleged that Price made investments which included marketable securities along with illiquid investments in South America Real Estate and South Georgia Bank. According to the SEC, Price attempted to conceal losses to investors by creating account statements containing false account balances, bogus returns, and false balances that were not only provided to investors, but also to bank regulators. The SEC confirmed that the accounts in which Price was trading on behalf of his customers had suffered massive trading losses. According to the SEC, Price admitted to falsifying statements with false returns in order to conceal $20-23M in investors losses. Consequently, the SEC charged Price (and one or more of his affiliated companies) with violations of Section 10(B) of the Securities Exchange Act of 1934, Rule 10B-5, and Sections 206(1), (2), and (4) of the Investment Advisors Act of 1940, along with Rule 206(4)-8.
According to public disclosure records, Georgia Commissioner of Securities entered an order on August 21, 2013, suspending registrations of Montgomery Asset Management, LLC, and Price in connection with the SEC’s aforementioned allegations of securities fraud. See SEC v. Aubrey Lee Price et al., No. 1:12-CV-2296-TCB (N.D. GA. July 13, 2012). The registrations of Montgomery Asset Management, LLC, and Price were revoked on October 20, 2012. On October 28, 2014, after Price pleaded guilty to one count each of brank fraud, wire fraud, and securities fraud in connection with his Ponzi scheme, Price was sentenced to 70 years in prison (he faces a maximum of 30 years as he will serve sentences for his charges concurrently).
Arbitration is a method of alternative dispute resolution, and many dust ups between customers and their advisors, brokers or broker-dealer firms may land in front of a FINRA arbitration panel. Such panels are usually composed of three impartial arbitrators who have some expertise in securities industry disputes, according to the FINRA website.
As a relatively quick and inexpensive means of resolving complicated issues, arbitration is an increasingly common alternative to litigation in the courts. Parties should be aware that arbitration awards are final and binding, and can only be reviewed by a court on an extremely limited basis.
All securities arbitrations are governed by the Uniform Code of Arbitration as developed by the Securities Industry Conference on Arbitration. The rules of the sponsoring organization where the claim is filed — such as FINRA — also apply. In addition to filing for a FINRA arbitration, investors may file complaints with other regulatory authorities, such as the Securities and Exchange Commission or the North American Securities Administrators Association.
Giuliano Law Firm
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Giuliano, Esq., and The Giuliano Law Firm, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.