A retired doctor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against Antoine Souma, Galliott Capital Advisors, and Insigneo Securities LLC seeking $1.4 million in damages. This is the most recent accusation against the once-high-flying broker Souma. According to the complaint, Souma artificially inflated the client’s risk profile, failed to disclose transactions to the investor, and made excessive trades in (or “churned”) the investor’s brokerage account. The investor claims to have lost $1.4 million as a result of the misconduct.
According to the complaint, Souma improperly replaced safe, short-term bonds in the investor’s account with longer-term and lower-quality bonds. These unapproved trades exposed the investor to greater interest-rate risk and greater credit risk, both contrary to the investor’s goals..
Insigneo Securities and Souma Accused of Excessive and Improper Margin Trades
Souma and Galliott allegedly improperly marked the investor’s account with an investment objective of “growth” and a “high” risk tolerance. Souma then shifted the investor’s portfolio away from low-risk, short-term investments towards riskier, long-term bonds. Souma also allegedly improperly used margin debt in the investor’s account to purchase securities, which increased the risk of loss even more.
While working with brokerage firm Insigneo, Souma and Galliott are accused of “churning” the investor’s account by quickly selling newly acquired bonds. Under FINRA Rule 2111, churning is the frequent buying and selling of securities in a customer’s account primarily to generate commissions rather than to serve the customer’s investment goals, and egregious cases carried out with reckless disregard for a customer’s interests constitute a form of securities fraud. FINRA evaluates churning claims using three key metrics: the account turnover rate, the cost-to-equity ratio (the percentage return an account must generate just to break even on trading costs), and patterns of in-and-out trading. Brokerage firms also bear independent liability under FINRA Rule 3110, which requires them to supervise registered representatives and take action when signs of excessive trading appear.
Souma Has Been Accused of Other Misconduct
FINRA previously suspended Souma for providing false and misleading account reports to a customer. FINRA found that account reports that Souma provided to a customer had incorrect account values and incorrect account performance, failed to reflect certain securities that actually were held in the customer’s account, and understated commissions that were charged to the customer. Souma’s prior employer JP Morgan paid $14 million to settle claims related to that wrongdoing. FINRA also suspended Souma for two months.
Contact an Experienced Stockbroker Fraud Lawyer
If you lost money while Antoine Souma was your broker, contact a stockbroker fraud lawyer at Kaplan Rothstein Prüss Peraza, P.A. for a free consultation. KRP2 represents investors throughout the United States and Latin America in stockbroker fraud and brokerage firm misconduct cases. Our offices are located in Miami, Los Angeles, West Palm Beach, New York, Naples, and we represent clients nationwide. Translation services are available.
