Did Former Raymond James & Associates, Inc. Broker Eddie Lyons Recommended You Unsuitable MLPs?
Posted on Wednesday, September 11th, 2019 at 8:19 pm
Former Raymond James & Associates, Inc. broker James Edward Lyons (Eddie Lyons) (CRD# 1020397) is accused of unauthorized trading and unsuitable investments in high risk Master Limited Partnerships (MLPs) linked to the high-risk energy sector.
Lyons was registered with Raymond James & Associates, Inc. in Shreveport, Louisiana from 2013 to May 2017, when he was terminated regarding, “Financial Advisor was terminated due to customer allegation of unauthorized trading.” Previously, he was registered with Morgan Keegan & Company, Inc. in Shreveport, Louisiana from 1993 to 2013.
In October 2019, Raymond James & Associates, Inc. lost a FINRA arbitration claim brought on behalf of a group of 27 investors for $3.2 million, plus 6% interest per annum, for unauthorized trading in the high risk oil and gas industry. This amount was inclusive of $140,000 in expert witness fees and $25,00 in costs and travel expenses.
According to FINRA, “The Statement of Claim asserted the following causes of action: violations of FINRA rules and industry standards; breach of contract; breach of federal and state laws; fraudulent and/or negligent representation; and fraudulent concealment. The First Amended Statement of Claim named the First Amended Claimants as additional claimants. The Second Amended Statement of Claim named the Second Amended Claimants as additional claimants and advised that Brenda Viselli is filing her claim pursuant to a federal court order. Among other claims presented throughout the hearing, the causes of action relate to Claimants’ investments in various oil and gas master limited partnerships and unit investment trusts, including Linn Energy, Memorial Production Partners, Calumet Partners and Cushing MLP Funds, as well as allegations of overconcentration and an alleged unauthorized trading pattern in Claimants’ accounts by unnamed party Mr. L and unlawful commissions received.”
In June 2018, Lyons was barred by FINRA after he consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation.
In late 2017, a FINRA arbitration was filed against Lyons on behalf of 39 former customers alleging unauthorized trading and the purchase of high risk oil and gas MLPs that were unsuitable for his clients.
MLPs are limited partnerships that are publicly traded and combine the tax benefits of a limited partnership with the liquidity of publicly traded securities. MLPs are offered in two classes: limited partners and general partners. Limited partners are comprised of investors who purchase units in the MLP to provide the capital for the operation and receive income distributions from the MLP’s cash flow. On the other hand, general partners manage the day-to-day operation of the MLP and receive compensation based on the MLP’s performance. Many financial advisors recommended MLPs to elderly and retired investors seeking income during their retirement years and often represented these investments as bond alternatives. They were not. Regrettably, many investors have only learned the true risks associated with MLPs and MLP funds after they sustained massive losses.
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.
Many of Lyons’ clients accounts were retirement account, and when some of the MLPs went bankrupt or decreased significantly in value, Lyons clients suffered massive losses.
Lyons has been the subject of eight customer complaints between 2011 and 2019, two of which were denied and one was closed without action, according to his CRD report:
June 2019. “Violations of FINRA Rules, unauthorized trading, suitability, overconcentration, mismarking trades, self-dealing, failure to disclose risk, breach of contract, fraudulent representation, concealing costs, and conflict of interest. Activity Dates: 1/31/00-12/5/18.” The case is currently pending.
September 2018. “Activity dates 1/10/1982 – 9/7/2018, Claimant alleges: Unsuitable Investments & Over-concentration.” The customer sought $1,279,497.47 in damages and the case was settled for $677,000.
November 2017. “From 2001 – 2017 Claimants are alleging violations of FINRA and Industry Standard Rules; Breach of Contract; Breach of Federal and State Laws; Fraudulent and/or Negligent Representation; Fraudulent Concealment; Unauthorized Trading; and Overconcentration.” The customer sought $5,000,000 in damages and the case was settled for $269,000.
April 2016. “Breach of Duties; Churning; Fraudulent Omissions; Federal Securities Law Violations; Louisiana Securities Law Violation; Unauthorized Trading; Suitability: Activity dates 2/17/2011 – 4/29/2016.” The customer sought $1,200,000 in damages and the case was settled for $400,000.
October 2011. “Claim alleges unsuitability, misrepresentation and unauthorized trading with regard to mutual funds, stock and unit investment trusts purchased in 2006 and 2007.” The case was settled for $152,000.
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 & Associates, Inc. may be liable for investment or other losses suffered by Lyons’ 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.