Madison Avenue Securities FINRA Claim
Case name: In the Matter of the Arbitration Between Matt J. Rocca Trust, et al. vs. Madison Avenue Securities LLC and David Lloyd Barber
Case type: FINRA Arbitration Claim
Filed in: [FINRA Dispute Resolution Arbitration]
In April 2018, Sanford Heisler Sharp filed an arbitration claim with the Financial Industry Regulatory Authority (“FINRA”) against Madison Avenue Securities, alleging the firm turned a blind eye in allowing one of its stockbrokers who had a disciplinary history of misappropriating clients’ funds to loot hundreds of thousands of dollars from the client’s account.
The claim alleged that the stockbroker, David Lloyd Barber, persuaded a long-time client to send him funds that he said he would use to buy bank CDs. Rather than buying the CDs, the broker took the money. Then, when the client asked for the money back from the bank, the stockbroker borrowed money from the client’s brokerage account and sent it to the client claiming it was the CD proceeds, the claim alleged. After about a year, the trusting client finally caught on to the scam.
The claim also alleged that the stockbroker invested the client’s account imprudently in volatile energy stocks and risky derivative securities. The stockbroker’s misconduct had a devastating effect on the client. An account that began with $1.6 million in March 2015 was worth $1,500 in the end.
Madison Avenue allowed the betrayal to happen, the claim alleged, through its “hear no evil, see no evil” approach to supervision. Madison Avenue knew the stockbroker had been fired from a prior firm and fined and suspended by FINRA for misusing client funds, the claim alleged.
In March 2019, a month before a scheduled FINRA panel hearing, the parties reached a settlement in the case.