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FINRA arbitration panel finds Morgan Stanley negligently supervised Financial Advisor who put clients’ money into Miami Beach hip-hop nightclub.

On December 26, 2018, FINRA released an arbitration award against Morgan Stanley awarding $3,332,000 to James Groves, a Mega Ball Lottery winner in 2013, and $879,000 to Asante Samuel, who retired in 2013 from the NFL after an 11-year career with the New England Patriots, Philadelphia Eagles, and Atlanta Falcons.

Groves and Samuel were represented by Curtis Carlson and Chase Carlson of Carlson & Associates in Miami, Florida and Matt Johnson of Dowd Bennett, LLP in Denver, Colorado.

Groves and Samuel were guided in their investments by Morgan Stanley financial advisor Aaron Parthemer, who is now barred from the securities industry for his activities relating to inducing his professional athlete customers to purchase investments away from Morgan Stanley, including the investment in Club Play, a high-profile hip-hop nightclub located in Miami Beach, where investors lost most of the funds they invested.  While employed at Morgan Stanley in Fort Lauderdale, Parthemer ran the Club on a day-to-day basis and represented himself to the public as the owner of the Club until it failed.

“The main point of the case was that Morgan Stanley knew he was down there running the Club and management did nothing about it,” said Curtis Carlson.  The arbitrators found that Morgan Stanley was liable for “negligence, negligent supervision and violation of FINRA Rules 3110 and 3120.”

The FINRA arbitration hearings were held over six days in October and November, 2018, in Miami, Florida.

This is Carlson & Associates’ second victory against Morgan Stanley for Parthemer’s activities in investing his professional athletes’ funds in outside investments.  In 2016, an arbitration panel awarded $608,300 to Keyon Dooling, a former NBA player with the Miami Heat among other teams, and $206,000 to John St. Clair, a former NFL player with the Miami Dolphin and other teams.

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