FSC created “an extremely cozy environment for a man bent on defrauding his customers,” said three NASD Securities Arbitrators, “management ineptness was broad” and the firm ignored red flags that the broker had “selling away” issues (using one’s status at a firm to aid in the sale of investments not approved by the firm).
FSC Securities of Atlanta, part of the AIG Financial Group, had warning when it hired broker Scott Hollenbeck that he had problems during his past employment, said a panel of three arbitrators in their award to several investors. During his past employment, they say, he even embezzled money from a church organization.
Hollenbeck was based in Kernersville, N.C. where he was employed by FSC for over 5 years, ending in 2002, not counting a 20 month hiatus. Not named in the arbitration claim, Hollenbeck faces charges over an alleged Ponzi investment scheme which reportedly took place after he left FSC and included the use of billboards.
Securities arbitration is a private process, without records available to the public, and the decisions made (“awards”) generally do not include much discussion about the case. However, these arbitrators saw fit to blast FSC while awarding victims almost $700,000, including legal fees and expenses. FSC claims the award includes payment to non-parties to the arbitration, a problem for all the victims if true and the award is challenged.
Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. We have represented investors in more than 1,000 securities arbitration cases. To learn whether we are able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.