FINRA arbitrators demanded this week that Oppenheimer & Co. pay more than $35 million in awards to a number of investors allegedly victimized by a Ponzi scheme that was reportedly orchestrated by a former Oppenheimer advisor during the time he worked there.
According to the arbitration award, the investors argued Oppenheimer was negligent in violating FINRA rules, breaching fiduciary duties and violating Georgia’s Racketeer Influenced and Corrupt Organizations (RICO) statute, among other claims.
The arbitration stemmed from the claimants’ “investments in Horizon Private Equity III,” an investment fund that operated as an alleged Ponzi scheme run by John Woods via his RIA, Southport Capital. According to a Securities and Exchange Commission (SEC) complaint filed last August, Woods, a minority owner of the minor league baseball team the Chattanooga Lookouts, raised more than $110 million from over 400 investors in 20 states.
In 2008, Woods began soliciting investors for the Horizon fund and also bought the Chattanooga-based Southport Capital. Woods and other Southport reps told clients they’d get returns with six to seven percent guaranteed interest for years, and that the investments held ‘little risk.’ But in reality, Woods and his RIA used funds from new investors to pay returns to already-existing ones, according to the SEC. In its complaint, the SEC argued Woods kept the scheme running for more than a…
