Boss "Outraged" Over Penalty For Failing to Supervise Ponzi-Scheming Broker
A Finra arbitration panel has ordered a New York-based firm, its chief compliance officer and its CEO to pay $3 million to investors over alleged failures to supervise one of its former brokers who set up a Ponzi scheme, according to news reports.
The panel awarded the money to 22 investors caught up in the scheme perpetrated by former Spire Securities broker Patrick Churchville, who was also owner and president of investment advice firm ClearPath Wealth Management, FA magazine writes.
In 2017, Churchville pleaded guilty to orchestrating a $21 million Ponzi scheme that he launched through ClearPath and was sentenced to seven years in prison, according to the publication.
But Spire Securities CEO David Blisk, who has been made partially responsible for paying the recent Finra award, says he is “outraged by the result,” according to FA magazine.
“We’re considering all our options and may file a motion to vacate the award,” Blisk says, according to the publication. “This broker is already in jail for this Ponzi scheme he created two years after he left Spire. We were never charged or even interviewed in the case the SEC brought against him.”
The SEC didn’t name Spire in its complaint against Churchville and ClearPath and his multi-strategy funds, FA magazine writes. Churchville was registered with Spire from August 2009 to February 2011, according to the publication, which cites his Finra record. He founded ClearPath in December 2010, according to the SEC complaint cited by FA magazine.
But the SEC’s complaint has no bearing on the Finra panel’s decision, Adam Gana, the securities attorney who represented the investors, tells the publication.
“So what if [Spire and Blisk] weren’t charged by the SEC? An arbitration panel found them responsible,” Gana tells FA magazine.