Finra Puts Once Highly-Ranked Los Angeles Broker on Notice
The Financial Industry Regulatory Authority’s enforcement unit this month told a high-profile Los Angeles broker to expect disciplinary action over a number of allegations, including causing inaccurate account statements to be sent to a customer and “willfully” failing to disclose a customer complaint, according to a disclosure on his BrokerCheck report.
The notice is the latest knock for the once top-ranked broker and 20-year industry veteran, who in 2019 made headlines when J.P. Morgan agreed to pay $14 million to settle a dispute with one of his clients.
Souma, who moved from J.P. Morgan in 2016 to join Morgan Stanley but left last summer to join independent brokerage Insigneo Securities, said in a comment appended to the BrokerCheck disclosure that he “strongly disagree[d]” with Finra’s determinations and allegations.
“Specifically, I did not cause inaccurate documents to be sent to a customer nor did I cause any of my employers to fail to retain any electronic communications,” Souma wrote. “Further, I did not fail to disclose any items on my Form U4, which has always been kept current and accurate.”
Souma, who in 2015 and 2016 ranked #75 and #76 on Barron’s Top 100 Advisors list, but has since dropped off the rankings, did not return a call for additional comment. He was managing more than $1.4 billion of Morgan Stanley client assets, Insigneo said last year, and two sources said last year that he produced $5.2 million in fees and commissions.
Also this month, Souma registered his own investment advisory firm, Galliot Capital Advisors, with the Securities and Exchange Commission, according to filings. He still remains a broker-dealer representative and investment adviser with Insigneo, according to his BrokerCheck record. He had been Miami-based Insigneo’s first California broker.
If Finra ultimately takes enforcement action such as a suspension or fine, it would only relate to his broker-dealer registrations, and Souma’s investment advisory firm would not be affected unless the SEC took separate action, according to lawyers.
Daniel de Ontanon, the chief executive officer of Insigneo, said in emailed responses to AdvisorHub’s inquiries that the firm stands by Souma. He also noted that the disclosures reflect “preliminary determinations only.”
“At Insigneo, we have taken appropriate measures to monitor the situation,” de Ontanon wrote. “We are in close contact with Mr. Souma and he and his clients enjoy our support.”
He declined to comment further on the nature of the allegations or whether Finra’s claims related in part to the $14 million settlement.
The 2019 settlement was made with Ziad Ghandour, a private equity firm founder and oil-and-gas investor who alleged that Souma traded excessively and unsuitably in his account and falsified performance reports, among other complaints.
Ghandour had sought more than $20 million, according to Souma’s BrokerCheck record and filings with state regulators.
Souma did not contribute to the Ghandour settlement and “vehemently denies the claimant’s allegations,” he wrote in a regulatory filing at that time.
A European-educated native of Lebanon who began his wealth management career 21 years ago at UBS Financial Services in August 2000, Souma shifted to Deutsche Bank Securities in March 2008 before moving in July 2010 to J.P. Morgan Securities, according to BrokerCheck.
Souma’s BrokerCheck shows one other client complaint on his record, a $250,000 claim for unsuitable recommendations tied to alternative investments that was denied.
The broker in February 2019 successfully won expungement of two other client complaints, according to an arbitration award.
In 2008 a customer sought $125,000 over allegedly unsuitable recommendations related to a variable-rate loan. The complaint was settled for $37,500, but in ordering the expungement, the panel determined that the customer was “a sophisticated investor and fully understood the consequences” and cleared Souma of wrongdoing.
A 2004 complaint from a UBS customer seeking $15,000 for misrepresentation and unauthorized trading was dismissed. The panel said that the claim “involved a financial transaction outside the services offered by [Souma’s former firm] and did not involve wrongdoing by Claimant.”