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Former WFG Investments, Inc. Client Wins FINRA Arbitration for $360,000 For Pump and Dump Scheme

Posted on Saturday, July 20th, 2019 at 8:20 pm    

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In April 2019, a former client of WFG Investments, Inc. won an award in a FINRA arbitration for compensatory damages for $358,387.21 for losses sustained from a pump and dump scheme. The investors were clients of brokers Wilson Williams (CRD# 834161) and David Williams (CRD# 4178982).

Wilson Williams is solely liable for and shall pay to Claimants the sum of $308,387.21 in compensatory damages. Wilson Williams and David Williams were jointly and severally liable for and shall pay to Claimants the additional sum of $50,000 in compensatory damages.

The causes of action included breach of contract and fraud in the inducement. Claimants alleged that Respondents engaged in a fraudulent enterprise, involving millions of dollars of fraudulently sold private placements and a massive pump and dump scheme that led to criminal indictments. Claimants further alleged that, as part of a settlement agreement, Respondents promised to use“best efforts” to sell certain of Claimants’ private placement securities but, ultimately, failed to do so. The FINRA arbitration hearing was conducted in Houston, Texas.

Wilson Williams was registered with WFG Investments, Inc. in Dallas, Texas from 1988 to 2017.

In August 2008, FINRA sanctioned Williams to civil and administrative penalties and fines in the amount of $25,000 for approving the publication of research reports that did not contain any disclosure regarding the risks associated with investing in the subject company. The firm, acting through williams, failed to establish written supervisory procedures reasonably designed to achieve and monitor compliance with the requirements of NASD Rule 2711.

In May 2003, the National Association of Securities Dealers, Inc. sanctioned Williams to a $10,000 civil and administrative penalty or fine after it was found that he reviewed and approved research reports for compliance with applicable federal securities laws and NASD rules and failed to adequately review the sales literature and allowed a registered representative to distribute research reports that violated NASD Rule 2210(d). The research reports had inadequate risk disclosures about specific risks of investing in hedge funds, made presentations that failed to provide investors with a reasonable basis for evaluating facts associated with investing in hedge funds, contained unwarranted statements and claims, and failed to disclose that the registered representative issuing the reports was affiliated with the firm.

Williams has also been the subject of four additional customer complaints between 2002 and 2017, one of which was withdrawn, according to his CRD report:

November 2017. “Claimant alleges failure to supervise.” The customer is seeking $236,081 in this pending customer complaint.

March 2016. “Claimants allege various failures including failure to conduct a reasonable investigation into Servergy, misrepresentation, unsuitable recommendations and breach of fiduciary duty.” The customer sought $2,780,000 in damages and the case was settled for $250,000.

September 2002. “Claimants allege that mr. Williams was “intentional, reckless or grossly negligent” in the hiring of William Neil Gallagher.” The customer sought $1.5 million in damages and the case was settled for $254,925.

David Williams was registered with WFG Investments, Inc. in Dallas, Texas from 2000 to 2017. Wiilliams has also been the subject of two additional customer complaints between 2015 and 2016, according to his CRD report:

March 2016. “Claimants allege various failures including failure to conduct a reasonable investigation into Servergy, misrepresentation, unsuitable recommendations and breach of fiduciary duty.” The customer sought $2,780,000 in damages and the case was settled for $250,000.

January 2015. “Claimants allege unsuitable recommendations and breach of contract.” The customer sought $500,000 in damages and the case was settled for $29,529.11.

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, WFG Advisors and WFG Investments, Inc. may be liable for investment or other losses suffered by the Williams’ 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 our FINRA lawyers 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.