Texas Securities Roundup: Morgan Stanley Smith Barney Sued Over Financial Adviser’s Ponzi Scam, Judge Dismisses Ex-GE Executive Whistleblower’s Lawsuit Over His Firing, & Ex-Stanford Financial Group CIO Pleads Guilty to Obstructing the SEC’s Probe

In Dallas County Court, 11 investors are suing Morgan Stanley Smith Barney and its financial adviser Delsa Thomas for bilking them in an alleged Texas Ponzi scam. They say that Thomas “took advantage of their trust in her when she suggested that they invest in Tejas Eagle Financial LLC. (She gave them the choice of investing $250,000 or $125,000.) They invested hundreds of thousand dollars of their retirement money and savings.

The plaintiffs contend that the financial firm breached its duty of care to them by allowing Thomas to give them unsuitable financial advice that “would destroy their investments.” They are seeking damages for negligent misrepresentation, fraud, negligent supervision, and vicarious liability.

In other Texas securities news, ex-Stanford Financial group chief investment officer Laura Pendergest Holt has pled guilty to charges that she obstructed the SEC’s probe into Stanford International Bank, which was owned by Ponzi scammer Robert Allen Stanford. Holt, who testified before the Commission about SIB’s investment portfolio, now admits that she did so as a “stall tactic” to impede the agencies efforts to get key information. Stanford is behind bars for running a $7 billion Ponzi scam.

In Houston, a federal judge has dismissed a lawsuit filed by Khaled Asadi, an ex-General Electric Co. executive. U.S. District Judge Nancy Atlas ruled that the anti-retaliation clauses of the Dodd-Frank financial reform law’s whistleblower provisions don’t apply to claims filed from outside the United States. Asadi, who worked for GE in Iraq, filed a civil suit claiming he was fired and that this violated the anti-retaliation provisions for whistleblowers.

Asadi’s allegations against the company were related to a $250 million, 7-year joint venture contract that company had landed in December 2010. He claims that he was let go after he expressed concerns that GE violated the Foreign Corrupt Practices Act, which doesn’t allow improper payments to be made to foreign officials. Asadi told the company that an Iraqi government source had informed him that GE had retained a woman with close ties to the senior deputy minister of electricity to influence the contract negotiations.

GE has denied Asadi’s claims and said his firing was not tied to his accusations. Contending that Dodd-Frank’s anti-retaliation provisions don’t cover behavior in other nations, it also fought against Asadi’s lawsuit, which sought his reinstatement, payment of his attorney fees, twice the back pay, and other relief. Judge Atlas agreed with GE, citing the US Supreme Court’s ruling in Morrison v. National Australia Bank, Ltd., which reaffirmed that Congressional legislation can’t be applied beyond our nation’s borders unless there is “contrary intent.”

Shepherd Smith Edwards and Kantas is a Texas securities law firm that represents both institutional and individual investors throughout the state and the rest of the US.

11 Claim Adviser Put Them Into a Ponzi, Courthouse News Service, July 2, 2012

Ex-Stanford executive pleads guilty to obstruction, Fox News/AP, June 21, 2012

Judge Says Anti-Retaliation Provisions Don’t Cover Foreign, The Wall Street Journal, July 3, 2012

More Blog Posts:
Ponzi Scam Receiver Can Go Forward with Securities Claim Against Texas Investor Who Benefited From the Fraud, Stockbroker Fraud Blog, June 26, 2012
Texas Securities Case: Mark Cuban Asks District Court To Reconsider Compelling the SEC to Produce Documents Related to Insider Trading Allegations Over Mamma.com Stock Offering, Stockbroker Fraud Blog, June 19, 2012
Dallas Man Involved in $485M Ponzi Scams, Including the Fraud Involving Provident Royalties in Texas, Gets Twenty Year Prison Term, Stockbroker Fraud Blog, May 8,