In January 2018, a former client of Madison Avenue Securities, LLC won a FINRA arbitration for $2,186,492.30 in damages for losses sustained due to excessive trading, unauthorized trading, unsuitable trading, breach of fiduciary duty and failure to supervise.
The customer’s broker, financial advisor David Barber (CRD# 1165082), was found solely liable and ordered to pay compensatory damages for $622,032.62, plus 10% interest per annum, and $622,032.62 in punitive damages, plus interest at the rate of 10% per annum. Madison Avenue Securities, LLC was found to be solely liable for and shall pay to claimant the amount of $211,808.55 in compensatory damages, plus interest at the rate of 10% per annum, and $211,808.55 in punitive damages, plus interest at the rate of 10% per annum. Madison Avenue Securities and Barber are jointly and severally liable for and shall pay to claimant the amount of $445,263.50 in attorneys’ fees and $44,296.90 in costs.
The causes of action included excessive trading and churning (control, excessive activity, scienter); unauthorized trading; unsuitable trading; breach of fiduciary duty; and failure to supervise. The FINRA arbitration hearing was conducted in San Diego, California.
The causes of action relate to claimant’s investments in the following investments, among others:
- Chesapeake Energy
- Westport Innovations Inc.
- Pacific Drilling SA Luxembourg
- BP Capital Twinline Energy Fund
Barber’s requests for expungement were denied in their entirety.
Barber was registered with Madison Avenue Securities, LLC in San Diego, California from March 2015 to January 2018. Previously, he was registered with First Midwest Securities, Inc. in Newport Beach, California from 2011 to 2015, and with Raymond James & Associates, Inc. in Newport Beach, California from 2007 to 2011, when he was terminated regarding, “Financial advisor was terminated after an internal investigation was conducted following the receipt of a client complaint alleging misappropriated funds. The firm concluded the financial advisor violated firm policies relating to outside business activities as well as violated firm policies and industry regulations as they relate to selling away. The firm lost confidence in the financial advisor’s ability to perform his duties when he failed to cooperate during an internal investigation.”
In March 2013, FINRA suspended Barber for four months and sanctioned him to civil and administrative penalties and fines of $25,000 following an investigation that he improperly received five loans totaling $867,000 from three customer of his member firm. “The three customers were Barber’s personal friends before they established securities accounts with him at his firm. The customers provided the loans to Barber by transferring their monies via wire from their brokerage accounts at the firm to a checking account in the name of a business entity owned by Barber that had not been disclosed to his firm. In doing so, Barber concealed the five loans from the firm. Barber then moved the customers’ monies via electronic funds transfers to his personal checking account and used the monies to pay personal expenses. Barber repaid the customers’ loans. Barber failed to provide prompt written notice to his firm of his involvement in his company, an undisclosed outside business activity.”
Barber has also been the subject of two additional customer complaints dating back to 2001, one of which was denied and one was withdrawn, according to his CRD report.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Madison Avenue Securities, LLC may be liable for investment or other losses suffered by Barber’s customers.
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.