Finra arbitrators exonerate Raymond James in scam targeting Ecuadorian investors
Finra arbitrators rarely reveal the reasoning behind their decisions. But this week, a panel went into unusual detail to explain to Latin American victims of a Ponzi scheme why they won’t be able to collect damages against a major brokerage.
More than 100 claimants, most of them from Ecuador, filed an arbitration claim in August 2018 against Raymond James Associates, Raymond James Financial Services and Insight Securities, a Chicago-based independent broker-dealer. They alleged they were ripped off in a financial fraud perpetrated by developers of real estate projects in Florida that sold shares in private placements sold by Biscayne Capital.
The investments took place from about 2013 until 2017. Raymond James was the clearing firm for Biscayne until it relinquished the account in 2016 after ending its Latin American operations in 2015. Insight Securities took over as the clearing firm. Insight restricted purchase of the private placements, and the $150 million Ponzi scheme collapsed in 2017, said Carlos Legaspy, owner of Insight Securities.
In their statement of claim, the investors alleged fraud, gross negligence, breach of fiduciary duty and failure to supervise, among other causes of action, according to the Nov. 1 award document. They sought nearly $30 million in damages.
After 304 hearing sessions involving 93 witnesses — many of whom testified through an interpreter and over Zoom — and reviewing approximately 10,000 exhibits over the course of 2½ years, a panel of three public arbitrators unanimously ruled that the investors failed to meet the burden of proof to show that Raymond James violated Florida laws or Securities and Exchange Commission or Financial Regulatory Authority Inc. rules.
The claimants did not
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