Erez Law recently filed a FINRA arbitration against Raymond James Financial Services on behalf of investors who suffered investment losses due to recommendations from their broker Steven Reznik (CRD #1067199). Reznik was a registered representative of Raymond James Financial Services, Inc. in Tallahassee, Florida from 1989 to July 2018, when he was terminated citing a failure to comply with heightened supervision requirements as the reason for Reznik’s termination.
The customers were inexperienced and unsophisticated with regards to options trading. The clients informed Reznik that the funds they had entrusted to Reznik and Raymond James represented the majority of their liquid net worth.
The Erez Law clients allege that Reznik touted himself as an expert in biotechnology sector and represented that he had developed a highly profitable strategy of investing in the biotechnology sector. Reznik represented to the clients that he was consistently generating significant returns for his other customers. Reznik assured the clients that their investment strategy employed risk management techniques that would limit their downside risk.
The Erez Law client alleges the following in the newly filed FINRA claim:
Despite the couple’s lack of investment knowledge or sophistication, Reznik and Raymond James recommended a reckless and unsuitable strategy of high risk options trading which resulted in the couple’s savings being dangerously concentrated in speculative stocks from the volatile biotechnology and pharmaceutical sectors, with devastating results. Reznik and Raymond James recommended a reckless and wildly speculative options trading strategy that resulted in the couple’s account being dangerously concentrated in high risk stocks from the volatile biotechnology and pharmaceutical sectors
Erez Law alleges that Reznik regularly executed transactions in the couple’s account without obtaining their prior authorization. In fact in 2015 alone, Reznik executed at least 340 transactions in the couple’s accounts.
The investors held investments with Raymond James between January 2015 and December 2018. During this time, the major equity market indices experienced significant positive returns. The couple were unknowingly exposed to massive risks with negative returns due to Reznik’s reckless mismanagement of their account.
It is alleged that Reznik failed to recommend an adequately diversified and suitable portfolio. A reasonably managed portfolio would have earned significant gains during this period. For example, during the same time period the couple maintained their accounts with Reznik and Raymond James, the S&P 500 index appreciated by approximately 17.8%, the Dow Jones Industrial Average appreciated by approximately 30.5% and the NASDAQ Composite Index appreciated by approximately 38.4%. Reznik’s reckless and unsuitable investment strategy deprived the couple of the opportunity to participate in the significant gains realized by the broader equity markets during this same time period.
According to the claim, FINRA and the law recognize the opportunity cost can be measured by applying what is known as the “well-managed portfolio” measure of damages, which is designed to compensate investors in this exact situation for the lost opportunity caused by Reznik’s wrongdoing.
Additionally, FINRA has repeatedly stated that broker-dealers that employ registered representatives with a history of customer complaints, disciplinary actions or sales practice violations have heightened supervisory responsibilities.
According to the claim, Raymond James’ decision to place Reznik under heightened supervision and subsequent firing of Reznik constitutes nothing less than a complete admission of liability of Reznik’s pervasive misconduct and Raymond James’’ failure to adequately supervise. Had Raymond James been adequately supervising its employees, including Reznik, the couple’s losses could have been avoided.
A recently obtained copy of Reznik’s CRD reveals that Reznik has recently been the subject of at least 18 customer complaints and/or FINRA arbitration claims involving the same or similar allegations including, but not limited to: Concentration, Suitability, Overconcentration, Unsuitability, Sector Concentration, Options, and Misrepresentations and omissions. Recent cases are regarding:
- July 2019. “Negligence and violation of FINRA Rules 2110, 2310, 2120, 2330 and 2111, Breach of Contract, Negligent Supervision, Breach of Fiduciary Duty and Violation of Florida Statute §772.11(1) (Elder/Disabled Financial Exploitation). 08/18/199-10/31/2018.” The customer is seeking $120,000 in damages.
- March 2019. “Overconcentration, Unauthorized Trading, Negligence, Breach of Contract, Negligent Supervision, Breach of Fiduciary Duties and Violation of FINRA Rules 2110, 2310, 2120, 2330 and 2111.” The customer is seeking $60,000 in damages.
- March 2019. “Negligence; Breach of Contract; Negligent Supervision; Breach of Fiduciary Duty.” The customer is seeking $500,000 in damages.
- March 2019. “Unsuitability, Overcentration, Breach of Fiduciary Duty, Negligence, Negligent Representation, Intentional Misrepresentation, Negligent Supervision, Breach of Contract.” The customer sought $350,000 in damages and the case was settled for $275,000.
- January 2019. “Negligence and Violation of FINRA Rules 2110,2310,2120,2330 and 2111; Breach of Contract; Negligent Supervision; and Breach of Fiduciary Duty. 6/11/09 – 9/28/18.” The customer is seeking $100,000 in damages.
- January 2019. “Overconcentration, Unauthorized Trading, Negligence, Constructive Fraud. 3/12-8/18.” The case is currently pending.
- December 2018. “Poor Performance.” The customer is seeking $15,267 in damages.
- November 2018. “Suitability, Overconcentration, Unauthorized Trading, Negligence and Violation of FINRA Rules 2110, 2310, 2120, 2330 and 2111, Breach of Contract, Negligent Supervision and Breach of Fiduciary Duty. 9/26/16 – 10/31/18.” The customer sought $125,000 in damages and the case was settled for $65,000.
- October 2018. “Unsuitability, Respondeat Superior, Failure to Supervise, Negligence, Fraud, Breach of Contract, Negligent Supervision, Breach of Fiduciary Duty. 2/27/96 – 9/28/18.” The case was settled for $30,000.
- September 2018. “Misrepresentations and omissions relating to unauthorized trades, fraud, breach of fiduciary duty, failure to supervise, negligence, gross negligence, negligent retention, negligent misrepresentation, concentration, and respondeat superior liability. 3/25/15 to 9/13/18.” The customer sought $2 million in damages and the case was settled for $145,000.
- September 2018. “Suitability.” The customer sought $142,183 in damages and the case is was settled for $10,000.
- September 2018. “Unsuitability, Common Law Fraud, Breach of Contract, Negligent Supervision, Breach of Fiduciary Duty, Violation of the Florida Securities Act.” The customer sought $100,000 in damages and the case was settled for $14,999.
- August 2018. “Poor Performance.” The customer sought $40,000 in damages and the case was settled for $5,000.
- August 2018. “Poor Performance.” The customer sought $100,000 in damages and the case was settled for $17,500.
- August 2018. “Respondeat Superior, Unsuitability, Common Law Fraud, Breach of Contract, Negligent Supervision, Breach of Fiduciary Duty. 10/2/12 – 7/31/18.” The case was settled for $32,500.
- July 2018. “Unauthorized Trades, Suitability.” The customer sought $35,000 in damages and the case was settled for $12,961.
- May 2018. “Concentration, Performance.” The customer sought $58,721 in damages and the case was settled for $5,000.
- June 2017. “Client alleged unauthorized trading and unsuitable investments. 8/11/2015 – 6/05/2017.” The customer sought $38,000 in damages and the case was settled for $15,000.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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