J.P. Morgan Pays $14 Million to Settle Customer Claim Against LA Broker
J.P. Morgan Securities has paid $14 million to settle a claim that it failed to supervise a Los Angeles broker who a client accused of a litany of sales, trading and loan promise abuses, according to regulatory filings.
Souma, who ranked 76 on Barron’s Top 100 Financial Advisor list in 2016 as head of a team managing $3 billion in client assets, remains with Morgan Stanley. He did not return a request for comment, and a Morgan Stanley spokeswoman declined to comment.
The client, Ziad Ghandour, alleged that between 2013 and 2015 Souma engaged in excessive and unsuitable trading, improperly exercised discretion, falsified performance reports and failed to extend a promised credit line, according to BrokerCheck and other regulatory reports. The trading abuses involved structured notes and fixed-income products, according to a report filed with state regulators.
Ghandour, founder of T.I. Capital, an industrial construction management company, alleged multiple fraud and breach of contract and breach of fiduciary claims in the amended complaint that J.P. Morgan settled in May but was previously unreported. He did not respond to a request for comment.
Souma, whose current team at Morgan Stanley includes four associates who moved with him and a muni bond trader also from J.P. Morgan, noted in his BrokerCheck comment that he did not contribute to the settlement. JPMorgan’s filing with state regulators said the firm concluded in 2018 “that evidence exists to support the belief that the [registered representative] was involved in or aware of the creation or transmission to a customer of altered account performance documents.”
Ghandour’s amended complaint sought more than $20 million in “net losses,” according to BrokerCheck.
A J.P. Morgan spokeswoman declined to comment.
The $14 million payment is at least the second eyebrow-raising decision by a large bank to settle charges customers brought against top wealth managers this year. Merrill Lynch in June paid $40 million to settle claims that Boston broker Charles Kenahan excessively traded a billionaire client’s accounts over five years. Merrill and Kenahan face another $42-million complaint by the client’s business partner.
Kenahan was discharged by Merrill last month, according to his BrokerCheck report.
Souma left J.P. Morgan six months before Ghandour filed his claim. He is the only “advisor” on the five-person team listed on his Morgan Stanley website.
Souma began his career at UBS Financial Services in August 2000, shifted to Deutsche Bank Securities in March 2008 and moved in July 2010 to J.P. Morgan Securities, according to BrokerCheck.
He has two earlier client complaints on his record. In 2008 a customer sought $125,000 over allegedly unsuitable recommendations related to a variable-rate loan. The complaint was settled for $37,500. A 2004 complaint from a UBS customer seeking $15,000 for misrepresentation and unauthorized trading was dismissed.
An arbitration panel in February granted Souma’s request to expunge the claims from his BrokerCheck record, according to an award, but a court has not yet affirmed the expungement.