Former Raymond James Clients Wins $1.8 Million FINRA Arbitration for Penny Stock Losses

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In May 2019, 20 former clients of Raymond James won an award in a FINRA arbitration for compensatory damages for $1.123 million, $200,000 in punitive damages, as well as $422,000 in attorney fees, $14,000 in costs, and $31,003.17 in expert witness fees for losses sustained from investments in penny stocks tied to the high risk energy sector. The investors were clients of financial advisor Logan Phillips Jr. (CRD# 1248589).

The investors all claimed to be hoodwinked by a broker in the Morgan Keegan branch office in Jackson, Mississippi. The broker is alleged to invest in the claimants’ retirement accounts in CanWest Petroleum Company and Ridgeway Petroleum, Inc. beginning in 2006. The broker pitched the investments in these companies as “next energy industry breakthroughs.” However, this was not the case. These investments were prohibited by the brokerage firm, and they had no hope of being profitable for investors. Raymond James acquired Morgan Keegan in 2012.

Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.

The causes of action included fraud; unsuitability; breach of contract; negligence; gross negligence; bad faith; violations of industry rules and regulations. The causes of action relate to Claimants’ penny stock investments in two Canadian companies, CanWest Petroleum Company and Ridgeway Petroleum, Inc. The FINRA arbitration hearing was conducted in Jackson, Mississippi.

Phillips was registered with Raymond James & Associates, Inc. in Jackson, Mississippi from 2013 to 2016, and previously with Morgan Keegan & Company, Inc. in Jackson, Mississippi from 1990 to 2013. Phillips has also been the subject of nine customer complaints between 2009 and 2017, one of which was denied and one was withdrawn, according to his CRD report. Recent complaints are regarding:

  • November 2017. “Claimants allege Respondeat Superior; False Representation; Negligent Misrepresentation; Negligence; Fraud; Breach of Contract; Mississippi Blue Sky Law; Violations of the Mississippi Securities Act of 2010. Activity Date is: 7/2004 through 10/2017.” The case is currently pending.
  • May 2016. “Claimants allege failure to supervise. Dates of activity are 6/2004 thru 3/01/2016.”
    The case was settled for $330,550.
  • June 2014. “Fraud, breach of fiduciary duty, breach of contract, negligence, gross negligence, and violations of industry rules, federal and state statutory laws, and common law principles.” The customer sought $4,498,697 in damages and the case was settled for $326,776 in compensatory damages, $200,000 in punitive damages, and $24,284.97 in costs.

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, Raymond James may be liable for investment or other losses suffered by Phillips’ 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.

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Author: Jeffrey Erez

The founder of Erez Law, Jeffrey Erez, focuses exclusively on securities arbitration and litigation. Mr. Erez passionately believes in representing aggrieved investors and obtaining justice for his clients through litigation.