Former Raymond James & Associates, Inc. Client Wins FINRA Arbitration for $340,00
Posted on Thursday, August 27th, 2020 at 8:03 pm
In May 2020, a former client of Raymond James & Associates, Inc. won an award in a FINRA arbitration for compensatory damages for $340,000 for losses investment sustained. The investors were clients of broker Paul Steffany (CRD# 1082262).
The causes of action included negligence; failure to supervise; and failure to oversee and manage the account. The cause of action relates to various investments. The FINRA arbitration hearing was conducted in Hartford, Connecticut.
Steffany was registered with Moors & Cabot, Inc. in Westport, Connecticut from 2014 to 2015. Previously, Steffany was registered with Raymond James & Associates, Inc. in Wilton, Connecticut from 2007 to 2014, when he was terminated regarding, “violation of company policy, admitted to improper endorsements on checks. As of this filing, Raymond James is not aware of any complaints by its customers relating to this conduct.”
In July 2020, FINRA suspended Steffany after he failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
In May 2016, the Banking Commissioner of Connecticut entered a Consent Order “permanently barred Steffany from 1) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent; 2) soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut; 3) engaging in any activity that would require Steffany to obtain a license or register under Chapters 668 or 669 of the Connecticut General Statutes governing Nondepository Financial Institutions and Regulated Activities, respectively, and 4) serving as a control person, qualified individual or branch manager of any entity regulated by the Commissioner under Chapter 668 of the Connecticut General Statutes.”
In March 2016, Steffany agreed to a permanent bar from association with any FINRA member in Arizona. The permanent bar is grounds to revoke Mr. Steffany’s registration as a securities salesman pursuant to A.R.S. §44-l962(A)(8).
In October 2015, Steffany was barred by FINRA and he “consented to the sanction and to the entry of findings that he converted funds belonging to his member firm’s customer, an estate with a testamentary trust for which he served as the trustee, by taking from the estate at least $112,742 purportedly as compensation for serving as the trustee. The findings stated that Steffany converted the funds by paying Steffany trustee fees that were excessive and inconsistent with the limited nature of his duties as trustee. The trust was established for the benefit of the son and grandchildren of the decedent. Steffany kept no records of the time he spent on trust-related matters or the tasks he performed as trustee, but estimated that he spent no more than approximately forty-three hours per year on trust-related matters. The document governing the trust was silent on the amount of compensation to be paid to the trustee. Steffany paid himself trustee fees by transferring funds from the estate’s brokerage account at the firm into a bank account held by the estate outside of the firm. Steffany arranged for the estate’s bank account statements to be sent to his home address. In doing so, Steffany concealed his misconduct from the firm. Although Steffany refunded approximately $112,742 to the estate and resigned as trustee, he did not do so until after the firm commenced an investigation into his administration of the trust. The findings also stated that Steffany forged the signature of a co-executor on checks made payable to the estate. Steffany deposited the checks into the estate’s bank account held outside of the firm and subsequently used certain of these funds for his personal use. Specifically, Steffany arranged for checks made payable to the estate to be issued from the estate’s brokerage account at the firm. The checks, which totaled $247,000, were made payable to the estate in the name of Steffany, who was an executor of the estate, and the co-executor. Steffany endorsed twelve of these checks, totaling $170,000, by signing his own name and forging the signature of his co-executor. Steffany endorsed the remaining checks “for deposit only.”
Steffany has also been the subject of four customer complaints between 2017 and 2020, one of which was closed without action, according to his CRD report:
January 2020. “On behalf of a Trustee, an attorney alleges that on or before 2007 the financial advisor withdrew funds from a trust for personal use.” The case is currently pending.
January 2018. “Claimant trustee alleges that between March 2004: June 2007 the FA engaged in an ongoing fraudulent course of conduct by repeatedly withdrawing funds from an AGE trust account which resulted in the theft of approximately $45,648.19 for the FA’s personal use or purposes not permitted under the trust.” The customer sought $45,648.19 in damages and the case was settled for $37,500.
September 2017. “Arbitration alleges fraud, negligent supervison, negligence, suitability and conversion. Activity date is 7/5/07 thru 6/30/17. (litigation alleged fraud, negligence, cutpa and misappropriation of funds. Date of activity: 7/1997 – 6/30/2017.).” The customer sought $600,000 in damages and the case was settled for $125,000.
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 Steffany’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.