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The Securities Arbitration Law Firm of KlaymanToskes announced today that it obtained an Award from a FINRA Arbitration Panel in the amount of $247,000, on behalf of an investor who sustained losses in two private placements: Shale Royalties and Layton Energy. The Respondent in the Arbitration was Houston based United Equity Securities (“UES”). The Statement of Claim sought damages of $250,000.
In issuing its Award, the FINRA Panel specifically found UES liable for unsuitable investment recommendations, failure to supervise and negligence and gross negilgence (Florida Statute 768.72). Under NASD Rules, brokerage firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings made under the SEC’s Regulation D under the Securities Act of 1933, also known as private placements. Shale Royalties and Layton Energy securities were private placements. Regulation D provides exemptions from the registration requirements of Section 5 under the Act. Regulation D transactions, however, are not exempt from the antifraud provisions of the federal securities laws. A brokerage firm has a duty—enforceable under federal securities laws and FINRA rules—to conduct a reasonable investigation of securities that it recommends, including those sold in a Regulation D offering. Failure to comply with this duty gives rise to an individual cause of action against the brokerage firm who sold the product to the customer. Presently, KlaymanToskes is handling numerous arbitration claims on behalf of investors who sustained losses in private placements.
UES was also ordered to pay $1,500 in discovery sanctions and return to the the Claimant the $300 non-refundable portion of her filing fee. In concluding its Award, the Panel assessed all forum and hearing fees on UES. Attorney Jahan K. Manasseh of KlaymanToskes handled the arbitration on behalf of the Claiment.