National investment fraud lawyers KlaymanToskes is investigating Jim Eugene Scala Jr. (CRD# 2493873) of Phoenix Financial Services Inc., after the Beverly Hills, California-based stockbroker was named in a customer complaint alleging a breach of fiduciary duty.
Investors that suffered losses with Jim Scala at PHX Financial are encouraged to contact attorney Lawrence L. Klayman, Esq., at 888-997-9956, or lklayman@klaymantoskes.com to discuss their recovery options at no cost. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
According to FINRA BrokerCheck, Jim Eugene Scala Jr. has seven public disclosures including four investor complaints. The most recent complaint alleges a breach of fiduciary duty and unspecified damages. A previous investor complaint was settled in favor of the investor and alleged churning, unauthorized trading, excessive commission charges, and suitability. Another investor complaint alleged stop losses were not placed on their account, and was settled for $24,000. Scala’s final investor complaint alleged unsuitable investments.
Scala entered into a letter of Acceptance, Waiver, and Consent (“AWC”) with FINRA’s Department of Enforcement in 2013, receiving sanctions of a 15 day suspension and a $5,000 fine in connection with findings that he engaged in private securities transactions. The AWC states that Scala allegedly sold shares he owned in an alternative energy company to several individuals, including customers of his firm.
FINRA Rule 3280 defines a private securities transaction as any securities transaction outside the regular scope of an associated person’s employment with a member firm. In accordance with FINRA rules, Scala was required to provide his firm with written notice and obtain prior written approval to sell his shares, which he failed to do.
An additional disclosure on Scala’s BrokerCheck profile states that he was discharged from National Securities Corporation for non-compliance with industry rules and the firm’s policies.
Former and current customers of Jim Scala or any other PHX Financial advisor who have experienced significant investment losses are encouraged to contact attorney Lawrence L. Klayman, Esq. at 1-888-997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation.
Our firm offers legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
PHX Financial entered into a letter of Acceptance, Waiver, and Consent with FINRA’s Department of Enforcement in late 2020. The department’s investigation revealed that the firm did not establish or maintain a supervisory system to identify or prevent excessive trading (“churning”) and options trading violations.
According to the AWC, PHX Financial received sanctions of a censure and $50,000 fine, along with being ordered to pay $356,711 in restitution to a customer. The department found that Robert Charles Delaplain (CRD#1017107), as President and Registered Options & Securities Futures Principal (“ROSFP”) as well as branch supervisor for the New York branch of PHX Financial, failed to reasonably supervise two representatives who engaged in unsuitable excessive trading and unsuitable options trading. Delaplain also served as PHX Financial’s Chief Compliance Officer (“CCO”) from 2012 to 2015.
The AWC alleges that one of the financial professionals Delaplain failed to supervise was Halil Kozi (CRD# 1121714). Kozi was named ROSFP by PHX in May 2013, giving him responsibility for reviewing new options accounts, confirming suitability risk levels, and reviewing options-related exception reports. The AWC states Kozi was a broker who engaged in extensive options trading and that PHX Financial did not take any preventative measures to ensure that a different options principal was reviewing options-related alerts for Kozi’s customers.
In one situation where Kozi was responsible for reviewing options related alerts for his own customer, the broker “effected more than 100 solicited trades” involving speculative options trading strategies that were inconsistent with the customer’s investment objective and conservative risk tolerance. Allegedly, while the customer incurred a net loss of nearly $72,000, Kozi generated over $135,000 in gross commissions, including over $97,000 in commissions to himself.
On March 17, 2020, an Offer of Settlement was issued suspending Kozi in all capacities for two years, ending on April 5th, 2022, with FINRA’s findings stating that Kozi had excessively traded a customer’s account and made unsuitable investment recommendations. Kozi is not currently registered as a broker or investment advisor, and was last registered with Windsor Street Capital in 2017 (a firm that was expelled in 2018). The AWC identifies the second representative that Delaplain failed to supervise as “RR” and states that this individual has since been barred from the securities industry.
If you experienced excessive trading or unsuitable investment advice at the hands of PHX Financial and/or their advisors, contact KlaymanToskes today for a free consultation at 888-997-9956.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com