Update on Paul Blum Investigation

Sonn Law Group is continuing their ongoing investigation into claims related to former broker Paul Vincent Blum (CRD#735003). Blum was most recently associated with RBC Capital Markets, LLC (“RBC”) in West Palm Beach, Florida having worked there from October 2009 through November 2015. Prior to joining RBC, Blum was associated with J.B. Hanauer & Co. from February 1991 through October 2009. Blum is not currently registered as a broker with any investment firm.

Additional Complaints against Paul Blum

Sonn Law Group represents two of Blum’s former clients, alleging substantial investment losses due to Blum’s unsuitable recommendations to make concentrated oil and gas investments in Swift Energy co., Basic Energy Services, Inc., Alpha Natural Resources, and RRI Energy. Following the January 2016 arbitration claim filed by Sonn Law Group, five additional complaints have been lodged against Paul Blum.

Sonn Law Group previously reported on Mr. Blum’s then 16 total complaints. At the time, Blum had 8  pending complaints and 8 closed complaints.  Since that last report, Blum has had 5 additional complaints, one of which has already been resolved. The additional complaints include:

1. A $45,000 arbitration claim for damages based on allegations of misrepresentation of investments, and unsuitable and unauthorized purchases filed on May 10, 2016 and was settled June 3, 2016, less than a month later, for $29,000;
2. A $200,000 arbitration claim for damages based on allegations of unsuitable recommendations of corporate energy bonds filed on July 13, 2016;
3. A $6,000,000 arbitration claim for damages based on allegations of unsuitable investments in energy sector corporate bonds filed on June 24, 2016;
4. A $2,250,000 arbitration claim for damages based on allegations of unsuitable recommendations of energy sector corporate energy bonds filed on May 3, 2016; and
5. A $75,000 arbitration claim for damages based on allegations of unsuitable recommendations of energy sector corporate bonds filed on May 2, 2016.

What Does a High Number of Customer Complaints Mean?

A recent study showed that brokers who have disclosures for misconduct are five times more likely to end up with future, similar marks on their records. Disclosures can include anything from bankruptcies, personal tax liens, and customer disputes with brokers. The study defined misconduct as regulatory actions, a job change following an allegation, customer disputes with awards, completed civil actions, and settled customer complaints. The study also included settled customer complaints in the definition of misconduct based on the observation that, even where a broker’s complaint was dismissed or dropped, the likelihood of future disclosures still increased five-fold.

Just over 7% of brokers have disclosures on their records. Considering most brokers have no disclosures on their records and there is a process to expunge, or erase, certain disclosures from their records, the 16 misconduct disclosures on Blum’s record is an exceptional number.

The Financial Industry Regulatory Authority (“FINRA”) holds brokerage firms to high standards. A brokerage firm must have a reasonable basis to believe that a transaction is the right fit for you based on their awareness and understanding of your investment profile. The brokerage firm must consider your age, other investments, investment objectives, investment experience, risk tolerance, investment time horizon, liquidity needs, and the like. A broker can be held liable for making unsuitable investment recommendations. Recommendations must be suitable. Member brokerage firms are also barred from presenting misleading information to get you to buy or sell an investment.

Further, FINRA member firms are responsible for the supervision of a broker’s activities while the broker is registered with their firm. Therefore, RBC Capital Markets, LLC may be liable for investment or other losses suffered by Blum’s customers.

If you were a client of RBC Capital Markets, LLC or Paul Blum and have experienced investment losses or irregularities in your investment accounts, please call Sonn Law Group at 866-830-7480 or click here to access our contact form. Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.