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FINRA Arbitration Panel In Florida Holds Broker-Dealer Liable For Negligent Supervision

On December 9th, 2021, a Financial Industry Regulatory Authority (FINRA) arbitration panel in Boca Raton, Florida awarded an investor $150,000.00 for negligent supervision (Case Number: 18-02720). The claim was filed after losses were sustained in hedge fund investments. While other causes of action were denied, the respondent (Credit Suisse Securities (USA) LLC) was found liable for the negligent supervision of two of its brokers. In this blog post, our Miami investment fraud lawyer discusses the ruling made by the securities arbitration panel.

FINRA Arbitration Award: $150,000 in Financial Compensation for Negligent Supervision 

The claimant in this arbitration case was the trustee for the John Mitchell Marmaduke Revocable Living Trust B Dtd 03/30/2009. The respondent was Credit Suisse Securities (USA) LLC (CRD#: 816/SEC#: 801-56264,8-422)—a brokerage firm licensed to operate in more than 50 American jurisdictions with a main headquarters in New York City. The underlying cause of action in this case was the purchase of several hedge funds on behalf of the claimant, including:

  • Credit Value Fund III, L.P.;
  • Credit Suisse China Harvest III;
  • Feeder Fund, L.P.; and
  • BlackGold Opportunity HedgeFocus Fund, L.P.

Upon review, the FINRA arbitration panel awarded the claimant $150,000 in financial compensation on the grounds of negligent supervision. Notably, the claimant had initially raised several other causes of action—including breach of fiduciary duty, breach of contract, and federal securities law violations. The claimant was seeking significantly more compensation as part of this case. However, those other claims were all denied by the FINRA arbitration panel. 

Broker-Dealers are Responsible for the Supervision of Financial Advisors

Licensed brokerage firms are responsible for overseeing the conduct of brokers, registered investment advisers (RIAs), and other associated persons. Under FINRA Rule 3110, a brokerage firm can potentially be held legally responsible for losses caused by the improper supervision of a securities professional. FINRA Rule 3110 is comprehensive. Brokerage firms should have a system in place for overseeing:

  • Securities transactions;
  • Communication with customers;
  • Internal discussion with the brokerage firm; and
  • Complaints by investors.

When an investor suffers losses due to an inadequate supervisory system, they may be entitled to financial compensation through a FINRA arbitration claim or another type of legal action. If you or your loved one sustained losses because a brokerage firm failed to live up to its obligations under FINRA Rule 3110, an experienced securities law attorney can help you pursue financial relief.

Call Our Miami Negligent Supervision Attorneys for Immediate Help

At ​Carlson & Associates, P.A., our Florida securities losses attorneys have extensive experience handling failure to supervise claims and FINRA Rule 3110 claims. If you sustained financial harm due to a broker dealer’s negligent supervision of a financial advisor, we are more than ready to help. Contact us by phone or send us a message online for a confidential assessment of your case. Our law firm provides securities law representation in Miami, Miami-Dade County, Florida, and beyond.


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