A FINRA arbitration panel ordered MML Investors Services, a MassMutual company, and Karen Michel, a former MML branch manager to pay a California investor $1.1 million for losses suffered on an unregistered investment that was part of a ponzi scheme.
Steven Corzan, the former MML broker, sold the investor $1.2 million in promissory notes issued by Diversity Lending Group, Inc. (DLG). On the advice of the broker, the purchase was financed using equity from the family home and retirement plan funds. The investor was told that DLG, run by Bruce Friedman, was a real estate investment but it turned out to be a fraud that was shut down by the Securities and Exchange Commission in 2009.
Corzan was barred from the industry by FINRA earlier this year.
In addition to the $1.1 award, the panel also awarded the investor expert witness fees and other costs to the investor, however they denied the request for attorney fees.
Brokerage firms have a duty to supervise the brokers that work for them to assure that they make suitable and legitimate investment recommendations. Investors who have suffered losses due to the negligence or fraud of their broker may be able to recover all or a part of their losses through FINRA arbitration.
If you have questions about the way your brokerage account has been handled, call for a no charge consultation with an experienced securities fraud attorney.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.