Aucoin et al. v. Shaw and VSR Financial Services, Inc.
Feb 04, 2016OUTCOME: The Arbitration Panel rejected respondents’ defenses and awarded Claimants $307,000, which was nearly the full amount of compensatory damages requested.
Claimants were retired, elderly customers of their trusted broker/financial advisor Gregory Martin Ellis from Baton Rouge, Louisiana. Mr. Ellis operated under the EA Financial Group and was a register ... ed representative of broker-dealer VSR Financial Services, Inc. From 2004-2007, Mr. Ellis advised Claimants to place a significant amount of their retirement funds into alternative investments (non-traded REITs, promissory note programs, limited partnerships, and private oil drilling programs). These investments were highly speculative, illiquid, and unsuitable for Claimants, but the sales of the investments paid very high commissions to Mr. Ellis and VSR. Mr. Ellis subsequently committed suicide. Eventually the investments failed to perform as marketed and Claimants (and other VSR customers) suffered significant damages. In April 2015, Claimants (and 3 other customers of VSR) filed an arbitration proceeding against VSR and another VSR advisor, Michael Dan Shaw, seeking recovery of their losses. In response, VSR argued that it was not liable to Claimants in any way because (i) the investments were suitable and appropriate for Claimants and (ii) Claimants failed to suffer any damages. The arbitration hearing took place January 12-20, 2016 in New Orleans. The claims of the other 3 customers settled prior to the start of the hearing.
