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FINRA Arbitration Panel Awards Florida Investor $90,000 in Inadequate Supervision Claim

Recently, a FINRA arbitration panel in Orlando, Florida ruled in favor of a Florida investor in a negligence claim. The respondents in the case were Vanguard Capital (CRD#: 22081) and its broker Aaron Christopher Ray (CRD#: 4613258). Mr. Ray served at the firm from 2004 to 2016 and was based at a branch office in New Port Richey, Florida. As of August of 2018, neither Vanguard Capital nor Mr. Ray is actively registered with FINRA.

The Allegations: Failure to Supervise  

In this case, the investor raised several different causes of action against the respondents, Vanguard Capital and broker Aaron Ray. The specific allegations include unsuitable investment recommendations, breach of fiduciary duty, broker negligence, and failure to implement proper supervisory procedures. The underlying issue in this case related to the liquidation of the investor’s brokerage account. Following this liquidation, the proceeds from the investor’s account were used to purchase annuities that were being offered by Vanguard Capital.

Notably, Vanguard raised a statute of limitations defense in this case. The brokerage firm argued that the claim must be dismissed on the grounds that it was brought after the six-year eligibility period had already lapsed. In general, investors must file their FINRA arbitration claim within six years. However, there can sometimes be questions over the specific date at which the fraud or negligence occurred. For example, in this case, the investor countered that the statute of limitations had not expired because the discovery of the fraud did not occur until the fall of 2016. She argued that the reason for this was because Vanguard Capital was actively concealing the misconduct. Therefore, she was still eligible to bring the claim. The FINRA arbitration panel agreed with the investor on this issue, and it allowed her claim to move forward.

Relevant FINRA Rules and Regulations 

Registered brokerage firms are legally responsible for the conduct of their representatives. The Financial Industry Regulatory Authority (FINRA) has several key supervisory rules. Brokerage firms must have an effective supervisory system in place and these firms must reasonably ensure that all associated persons are in full compliance with state and federal securities laws. If an investor sustained losses due to an individual broker’s fraudulent or negligent conduct, their member firm may potentially be held financially responsible for the investor’s damages.  

The Decision and Arbitration Award 

Upon hearing all of the evidence, the FINRA arbitration panel awarded the investor $90,000 in compensatory damages plus costs and fees. The panel specifically noted that Vanguard Capital and broker Aaron Ray were being held financially liable for ‘lack of supervision’ and ‘negligence’. Under securities industry rules, registered brokers and brokerage firms have 30 days to comply with the terms of FINRA arbitration award.

Contact Our Miami FINRA Arbitration Lawyers Today

At Carlson & Associates, P.A., our investment fraud lawyers have deep experience handling FINRA arbitration and securities litigation. If you lost sustained large investment losses due to fraud or negligence, we can help. For a confidential review of your legal claim, please call our Miami law office today at 1-(305) 372-9700.


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