The Labor Day Knucklehead award Marathon Part One
Another holiday, another festival.
Our first winner today is brokerage firm Sterne Agee Financial Services. They get the award for the following.
SARASOTA -- Regulators have ordered a brokerage firm to pay more than $175,000 in damages to a Venice retiree who lost money in an investment, including $100,000 in punitive damages.The company wanted to close the office and was aware of Lucci and was aware of his not being registered to sell securities, and Sterne Agee didn't do anything.(I could add Lucci's record of terminations and complaints speaks wonders too. If he made the firm money, the company probably turned a blind eye to Lucci). That's good enough with me, Sterne Agee Financial Services is today's first Knucklehead of the Day.
Sterne Agee Financial Services, based in Alabama, committed "gross negligence and intentional misconduct" in failing to supervise its Sarasota office, a dispute panel from a securities industry oversight group found.
A compliance officer for Sterne Agee visited in 2003 and had recommended shutting down the office, operating as U.S. Tax Advisory Group, court records state.
The officer was concerned about the connection between the office and a broker the company had refused to hire -- and who was not registered to sell securities at the time.
But Venice retiree Richard Gauzza said Sterne Agee kept the office open for another 30 days, enough time for that broker to convince him to open an account and invest $100,000 of his retirement money.
"They should have put someone physically in that office to watch everything that was going on," said Sarasota attorney James Keeney, who represented Gauzza. "But they didn't."
The NASD panel also ordered two brokers who worked at U.S. Tax Advisory Group, Margaret Rucker and Barbara Knox, and the broker who was unregistered at the time, Robert "Chip" Lucci, to pay $75,000 to Sterne Agee.
The company and the three brokers named in the dispute say the arbitration panel did not follow the law, and Gauzza just went after whomever he could after his investment fizzled.
Sterne Agee attorney Tom Krebs said he will appeal the ruling because their office did not have anything to do with the "Madison Hedge Fund" that Gauzza invested in with the $100,000. The fund became insolvent several years later.
The office and the employees did not make any money on Gauzza's investment, Krebs said. They only transferred the money to Guy DellaPenna, the manager of the hedge fund, at Gauzza's request.
"I think they got that wrong," Krebs said. "There was nothing there that tied us to him."
Lucci, who has two terminations and 12 customer complaints on his broker background, said he will fight the NASD award.
Linked to- Big Dog, Bright & Early, Cao,