Former Morgan Stanley Clients Win $4.2 Million FIRA Award Due to Negligent Supervision of Barred Broker Aaron Parthemer
Posted on Saturday, January 5th, 2019 at 11:25 am
In December 2018, a former client of Morgan Stanley won an award in a FINRA arbitration for $4.2 million for negligent supervision related to investment losses with barred broker Aaron Parthemer (CRD# 2546369). The FINRA arbitration panel found Morgan Stanley to be liable for negligence, negligent supervision, and violation of FINRA Rules 3110 and 3120.
One former client, a Mega Millions lottery winner, was awarded $2,379,000 in compensatory damages, as well as $953,000.00 in pre-judgment interest and post-judgment interest. A second client, former NFL cornerback Asante Samuel, was awarded $863,700.00 in compensatory damages, plus $15,300.00 in pre-judgement interest and post-judgment interest. Morgan Stanley was also liable for and shall reimburse the claimants the sum of $750 for the non-refundable portion of the filing fee.
The investors were clients of financial advisor Parthemer. The causes of action included breach of fiduciary duty; negligence and gross negligence; violations of FINRA Rules 2111, 3110 and 3120; and negligent supervision. The causes of action relate to Claimants’ investments in the South Beach Club and the 7020 Club. The FINRA arbitration hearing was conducted in Miami, Florida.
The Florida broker was known to socialize with celebrity clients in the National Football League (NFL) and the National Basketball Association (NBA). The barred broker is accused of participating in outside business activities related to investments in a Miami nightclub in which he had ownership stake.
Parthemer was registered with Wells Fargo in Fort Lauderdale, Florida from 2011 to 2015 and Morgan Stanley in Fort Lauderdale, Florida from 2009 to 2001. Parthemer was terminated from Wells Fargo in April 2015 following FINRA allegations. Parthemer was a National Football League Players Association (NFLPA) Registered Financial Advisor between 2012 and 2015.
In July 2018, two professional athletes – Udonis Haslem and Louis Delmas – filed claims against Morgan Stanley, seeking $600,000 for failure to supervise Parthemer. It is alleged that Parthemer recommended his clients invest in Miami nightclub Club Play, a club that is no longer in operation, in 2010 and 2011.
In August 2018, Haslem formerly of the Miami Heat, filed a $413,000 complaint against Parthemer regarding, “Claimant alleged, inter alia, FA solicited outside investment opportunities not authorized by firm – 2010 to 2011.”
In July 2018, Delmas filed a $180,000 complaint against Parthemer regarding, “Claimant alleged, inter alia, FA solicited outside investment opportunities not authorized by firm – Feb 2011- July 2011.”
In June 2018, Morgan Stanley paid $600,000 to settle a $1.6 million customer complaint from Antoine Bethea, an Arizona Cardinals safety regarding, “Claimant alleged, inter alia, that FA solicited to him outside investment opportunities that were unauthorized by the firm and which the FA had a personal interest.”
In March 2017, The Securities and Exchange Commission (SEC) barred Parthemer and sanctioned him to $160,000 in civil and administrative penalties and fines. The SEC found that between 2009 and 2012, Parthemer sold more than $5 million in unregistered, illiquid securities to professional athlete brokerage customers and investment advisory clients in an internet branding company known as Global Village Concerns, Inc. Parthemer’s participation in the sale of GVC securities occurred outside of his employment with Wells Fargo. The SEC alleges that Parthemer misrepresented and omitted material information about the GVC investments to his investment advisory clients, and he presented information to his client without conducting due diligence.
In April 2015, FINRA alleged that Parthemer engaged in outside business activities without providing notice to Wells Fargo, and based on the findings he was permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. FINRA found that Parthemer loaned almost $400,000 to a firm customer for something non securities related, despite firm prohibitions against such transactions. It is alleged that Parthemer also, “presented to firm customers an undisclosed private security in which the customers ultimately invested in approximately $3.08 million of preferred stock of a company,” according to the Acceptance, Waiver and Consent form. Parthemer also provided false information and documentation during the FINRA investigation.
Parthemer raised more than $5 million in capital from Wells Fargo customers for an unregistered and illiquid company, Global Village Concerns, Inc., a branding and marketing company that helped high schools and non-profit organizations earn money by selling customized school or organizational memorabilia and products. It is alleged that Parthemer sold these securities to NFLPA members and other investments clients of Wells Fargo and Morgan Stanley, communicating to the investors that they would see millions, despite not having any basis for this valuation. It is also alleged that Parthemer misrepresented and omitted material information about the investment to his clients, and he failed to conduct due diligence regarding the validity of information regarding this investment.
In September 2015, Parthemer was the subject of an investigation by the New Jersey Bureau of Securities which alleged that he engaged in dishonest or unethical practices in the securities business.
Parthemer has been the subject of 10 additional customer complaints between 2015 and 2018, one of which was denied, according to his CRD report:
August 2018. “Claimant alleged, inter alia, FA solicited outside investment opportunities not authorized by firm – 2010 to 2011.” The customer is seeking $413,000 in damages and the case is currently pending.
July 2018. “Claimant alleged, inter alia, FA solicited outside investment opportunities not authorized by firm – Feb 2011- July 2011.” The customer is seeking $180,000 in damages and the case is currently pending.
February 2018. “Claimant alleged, inter alia, misrepresentation with respect to investments – 2007 to 2017.” The case is currently pending.
September 2016. “Claimant alleged, inter alia, that FA solicited to him outside investment opportunities that were unauthorized by the firm.” The customer is seeking $205,000 in damages and the case was settled for $120,000.
July 2016. “Claimants alleged, inter alia, that FA solicited to them outside investment opportunities that were unauthorized by the firm.” The customer is seeking $7,818,162.85 in damages and the case was settled for $360,000.
June 2016. “Claimants allege, inter alia, that from June 2009 to October 2011 the FA recommended an investment that was not authorized by the firm.” The customer sought $1,425,000 in damages and the case was settled for $228,000.
June 2015. “Claimants allege, inter alia, that in 2009 and 2011 the fa recommended an investments that was not authorized by the firm.” The customer sought $4,864,846 in damages and the case was settled for $1,100,000.
May 2015. “Negligence, gross negligence, breach of contract, fraud, fraudulent misrepresentation, negligent misrepresentation, fraud in the inducement, and breach of fiduciary duty.” The client was awarded $700,000 in damages.
May 2015. “Negligence, gross negligence, breach of contract, fraud, fraudulent misrepresentation, negligent misrepresentation, fraud in the inducement, and breach of fiduciary duty” The claimant was awarded $200,000 in damages.
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, Wells Fargo may be liable for investment or other losses suffered by Parthemer’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.