A recent FINRA arbitration award involving former Arkadios Capital representative Michael Lickiss and Arkadios Capital highlights an important question for investors: when investment fraud occurs, can a brokerage firm be held responsible for failing to detect or prevent it?
According to reports, a FINRA arbitration panel recently awarded approximately $2.7 million to an investor who alleged that Arkadios Capital failed to adequately supervise activities connected to a long-running Ponzi scheme involving Michael Lickiss’s father, Edwin Emmett Lickiss. Arkadios has disputed the decision and indicated that it intends to challenge the award.
While the arbitration involved specific facts and allegations, the case serves as an important reminder that investor claims often extend beyond the individual accused of wrongdoing.
Why Brokerage Supervision Matters
Many investors assume that their financial adviser alone is responsible when losses occur.
However, brokerage firms and registered investment firms are generally expected to maintain supervisory systems designed to monitor representatives, investigate red flags, and help protect investors from misconduct.
When those systems allegedly fail, investors may pursue claims based on negligent supervision, failure to supervise, breach of fiduciary duty, or related theories depending on the circumstances.
In many investment-loss cases, the central question is not simply what the adviser did, but whether the firm should have identified warning signs earlier.
The Allegations Involving Michael Lickiss
Public records show that Michael Lickiss has been the subject of multiple customer disputes involving allegations related to promissory notes, fictitious notes, fraud, negligence, breach of fiduciary duty, and failure to supervise. Several of those matters remain pending. Michael Lickiss has denied involvement or knowledge regarding many of the allegations reflected in public filings.
According to FINRA and SEC disclosure records, pending claims include allegations involving:
- Fictitious notes
- Promissory notes
- Failure to supervise
- Breach of fiduciary duty
- Fraud-related allegations
Several claims seek substantial damages, including one matter reportedly seeking $11 million.
Promissory Notes and Investor Risk
Promissory notes frequently appear in investment fraud cases because they are often sold outside traditional brokerage platforms and may receive less scrutiny than publicly traded securities.
Investors should be cautious when presented with investments that promise:
- Consistent returns
- Above-market yields
- Limited risk
- Exclusive opportunities
- Minimal documentation
Before investing, investors should independently verify the issuer, understand how returns are generated, and confirm whether the investment has been properly disclosed and supervised.
Lessons for Investors
The Michael Lickiss and Arkadios Capital matter illustrates an important principle of investor protection:
Recovery efforts are not always limited to the individual accused of misconduct.
In appropriate cases, investors may explore whether a brokerage firm, advisory firm, supervisor, or other entity failed to identify red flags or adequately oversee investment activities.
That is why regulatory records, customer complaints, arbitration filings, and supervisory procedures often become central issues in investor recovery claims.
Sources
Barron’s Advisor:
(www.barrons.com/advisor/articles/finra-award-ponzi-arkadios-capital-2a840107)
InvestmentNews:
(www.investmentnews.com/regulation-legal-compliance/dads-ponzi-scheme-costs-sons-former-b-d-27-million-in-finra-arbitration/266966)
FINRA BrokerCheck Report:
(https://files.brokercheck.finra.org/individual/individual_5135936.pdf)
SEC / Investment Adviser Public Disclosure Report:
(https://reports.adviserinfo.sec.gov/reports/individual/individual_5135936.pdf)
Disclaimer
The allegations described in customer complaints and arbitration filings remain allegations. Michael Lickiss has denied involvement or knowledge regarding numerous allegations referenced in public disclosure records. Claims remain subject to ongoing proceedings where applicable.
