JP Morgan Securities (JPM) agreed to pay $14M to a claimant who accused its former broker Antoine Souma of misconduct that allegedly led to $20M in net losses. According to Advisor Hub, Souma, who is based in Los Angeles, was named in Barron’s 2016 Top 100 Financial Adviser list. He is currently a Morgan Stanley (MS) broker. He “vehemently denies” the allegations made in this investor fraud claim.
The claimant, Ziad Gandour, is the founder of industrial construction management company TI Capital. He accused Souma of the following:
- Breach of contract
- Breach of fiduciary duty
- Excessive trading
- Unsuitable trading
- Falsifying performance reports
- Improperly exercised discretion
- Trading abuses involving fixed-income products and structured notes
Souma’s BrokerCheck record notes 19 years in the industry. He also was previously a registered broker with Deutsche Bank (DB) and UBS (UBS).
Gandour accused JP Morgan of inadequately supervising Souma.
FINRA Fines JP Morgan $1.1M
Just recently, the brokerage firm was fined $1.1M by the Financial Industry Regulatory Authority (FINRA) for not reporting allegations and internal reviews involving broker misconduct in a timely manner. According to the self-regulatory organization (SRO), from 1/2012 to 4/2018, there have been 89 times when JP Morgan Securities either didn’t meet FINRA’s deadline for disclosing when a firm’s broker engaged in allegedly suspect activity, including misappropriating monies, borrowing funds from clients, making unauthorized trades, unsuitable recommendations, or forging documents. The SRO said that in certain cases, JP Morgan never even notified FINRA about broker fraud allegations or waited two years to do so. Because of the firm’s delays in notifying the SRO, FINRA was prevented from imposing disciplinary measures against 30 ex-JP Morgan brokers.
It is the responsibility of broker-dealers to notify FINRA that it fired a financial representative over fraud allegations or other wrongdoings or violations within 30 days of taking action. The SRO accused JP Morgan of not setting up and keeping up a supervisory system for identifying when it should disclose firings. This type of lapse can be grounds for inadequate supervision claims from a client should broker fraud arise.
Brokerage Firm Misconduct
Our broker-dealer misconduct lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) represent retail investors, high net individual investors, and institutional investors in recovering losses caused by broker fraud or the negligent supervision by brokerage firms. Contact SSEK Law Firm today.