National investment fraud law firm Dimond Kaplan & Rothstein, P.A. (“DKR”) is investigating potential claims against brokerage firm Oppenheimer & Co., Inc. (“Oppenheimer”) (NYSE: OPY) on behalf of Oppenheimer customers who invested in Horizon Private Equity III (“Horizon”). The United States Securities and Exchange Commission (“SEC”) has filed a complaint against former Oppenheimer broker John Woods and Woods’ investment advisory firm, Livingston Group Asset Management Company d/b/a Southport Capital (“Southport”), alleging that Woods ran Horizon as a massive Ponzi scheme for more than a decade.
Woods is believed to have solicited a significant number of Oppenheimer customers to invest in Horizon during the time he was registered as a broker with Oppenheimer. The SEC has alleged that Woods bilked more than 400 investors out of more than $110 million.
Current and former Oppenheimer or Southport customers who invested in Horizon Private Equity III are encouraged to contact Dimond Kaplan & Rothstein, P.A. for a free case evaluation. If you or someone you know invested in Horizon, call (888) 578-6255 or email DKR attorney Jeffrey Kaplan at firstname.lastname@example.org to discuss your legal options.
The Alleged Ponzi Scheme
According to the SEC’s complaint, broker John J. Woods began his Ponzi scheme in 2008 when he was a broker working for Oppenheimer. The SEC has alleged that Woods often targeted elderly investors and promised guaranteed returns of 6% to 7% for two to three years.
Woods reportedly told investors that Horizon would generate returns by investing in government bonds, stocks, or small real estate projects. Importantly, investors were not told that their money could be used or would be used to pay “investment returns” to earlier investors. But the SEC says that is exactly what Woods did. That is, the SEC accuses Woods of engaging in a classic Ponzi scheme by using newer investors’ money to pay purported investment returns to earlier investors. Further, the SEC claims that Horizon did not make any significant returns from legitimate investments. Millions of dollars of investor assets remain unaccounted for.
Oppenheimer May Have Violated Its Obligations to Oppenheimer Customers
It has been reported that Oppenheimer was aware that Woods was operating Horizon and failed to fire Woods when it learned that Woods was engaging in improper conduct. Rather, Oppenheimer permitted Woods to resign voluntarily. Even worse, upon information and belief, Oppenheimer did not contact any of Woods’ customers (i.e., those who invested in Horizon) to inform them of Woods’ misconduct.
Oppenheimer, like all brokerage firms, was required to supervise the activities and investment recommendations of its brokers. This supervisory function is vital to protect customers from broker misconduct. Failure to supervise, resulting in losses to investors, may result in the firm being held liable for investor losses. Moreover, brokerage firms owe certain disclosure obligations to their customers. Oppenheimer may be found liable for Horizon investors’ losses as a result of its failure to inform customers of Woods’ misconduct.
FINRA Arbitration Claims May Be More Favorable than a Class Action
While a class-action lawsuit has been filed against Oppenheimer on behalf of Horizon investors, that may not be the best avenue for many Horizon investors to recover their investment losses. A FINRA arbitration claim may be a better alternative for many Horizon investors seeking to recover their losses.
Class actions often can take many years and loss recoveries in investment fraud class actions often are far less than recoveries that may be obtained by investors who file their own FINRA arbitration claim. FINRA arbitration cases often are completed within 12 to 18 months, generally are far more time and cost-efficient than a class action, and recoveries for investors who file individual FINRA arbitration claims often can be far greater than recoveries obtained in a class action. Any investor who has lost $100,000 or more in Horizon would be wise to consider filing their own FINRA arbitration claim.
Speak with an Investment Fraud Attorney
Dimond Kaplan & Rothstein, P.A. has vast experience representing victims of Ponzi schemes and other investment fraud. The firm has recovered millions of dollars for Ponzi scheme victims throughout the United States and we will aggressively pursue claims to recover your losses.
Contact Dimond Kaplan & Rothstein Today
Contact a securities fraud attorney at Dimond Kaplan & Rothstein, P.A. to schedule a FREE case evaluation to review your rights and options.