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James Lyons – Investor Alert – UPDATED

Did you lose money investing with James Lyons (CRD# 1020397)?

James LyonsGalvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing with James Lyons. If you suffered losses investing with James Lyons, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim.

As of May 12, 2020, James Lyons’s FINRA BrokerCheck Report contains the following:

BARRED: FINRA has barred this individual from acting as a broker or otherwise associating with a broker-dealer firm.

Disclosure Events

8 Customer Dispute(s)

1 Regulatory Event(s)

1 Employment Separation After Allegations

UPDATED: According to records publicly released by FINRA, a panel of arbitrators has awarded $3.2 million a group of 27 Raymond James & Associates customers who alleged unauthorized trading in oil and gas ventures by its former financial advisor James Lyons. James Lyons has been barred by FINRA from acting as a broker or otherwise associating with a broker-dealer firm.

According to the award, between February 2013 and November 2017, James Lyons allegedly invested the Claimants in oil and gas Master Limited Partnerships (“MLPs”) and Unit Investment Trusts, including, but not limited to, Linn Energy, Memorial Production Partners, Calumet Partners, and Cushing MLP Funds, without their approval. The Claimants portfolios were allegedly over concentrated with approximately 80% invested in oil and gas MLPs, and when oil prices took a dive in 2014, so did the value of the portfolios.

The arbitration panel reportedly awarded approximately $3.2 million, plus interest, to the 27 customers (primarily in compensatory damages). The Claimants reportedly had asked for $8.9 million.

Current and Previous Registrations

02/13/2013 – 05/22/2017 RAYMOND JAMES & ASSOCIATES, INC. (CRD#:705) SHREVEPORT, LA
08/02/1993 – 02/13/2013 MORGAN KEEGAN & COMPANY, INC. (CRD#:4161) (Acquired by Raymond James & Associates, Inc. (CRD#:705) SHREVEPORT, LA
05/17/1983 – 08/02/1993 CAPITOL SECURITIES GROUP, INC. (CRD#:8094)

Due Diligence Requirement

FINRA requires broker’s to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”

Brokers and the brokerage firms they work for that fail to conduct adequate due diligence on investments they recommend or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.

Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability.

(a) The reasonable-basis obligation requires a member or associated person to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. In general, what constitutes reasonable diligence will vary depending on, among other things, the complexity of and risks associated with the security or investment strategy and the member’s or associated person’s familiarity with the security or investment strategy. A member’s or associated person’s reasonable diligence must provide the member or associated person with an understanding of the potential risks and rewards associated with the recommended security or strategy. The lack of such an understanding when recommending a security or strategy violates the suitability rule. Thus, brokerage firms had a duty to determine whether was suitable for at least some investors.
(b) The customer-specific obligation requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile, as delineated in Rule 2111(a).
(c) Quantitative suitability requires a member or associated person who has actual or de facto control over a customer account to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile, as delineated in Rule 2111(a). No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

Request a Free Consultation with a Securities Attorney

If you suffered losses investing with James Lyons and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

This information is all publicly available and is being provided to you by Galvin Legal, PLLC.

Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities fraud, securities regulation and compliance, and investor protection law practice. For more information on Galvin Legal, PLLC and its representation of investors, please visit www.galvinlegal.com or call 1-800-405-5117.

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