Pending Arbitrations, Private-Placement Losses, Options Claims, Selling Away, and FINRA Bars

Sonn Law Group is reviewing recently reported customer disputes and regulatory actions involving financial professionals associated with firms including J.P. Morgan Securities, Morgan Stanley, Wells Fargo Clearing Services, UBS Financial Services, Merrill Lynch, Aegis Capital, Boustead Securities, Realta Equities, Glendale Securities, and Reid & Rudiger.

The matters summarized below involve allegations or findings concerning:

  • Unsuitable investment recommendations;
  • Private placements and alternative investments;
  • Options and derivatives;
  • Delaware Statutory Trusts, or DSTs;
  • Selling away;
  • Misrepresentations and omissions;
  • Excessive trading and churning;
  • Regulation Best Interest violations;
  • Personal loans involving customers; and
  • Brokerage-firm supervisory failures.

A pending customer dispute is not a finding of liability or wrongdoing. Allegations may be disputed and can ultimately be denied, withdrawn, dismissed, settled, or resolved in favor of the broker. Where FINRA has entered final findings or imposed a bar, that distinction is stated expressly.

The following information is based on public FINRA BrokerCheck records reviewed through September 11, 2026.

1. Kexin Xu — CRD No. 6966805

Kexin Xu was formerly registered with J.P. Morgan Securities LLC and is the subject of a pending FINRA arbitration seeking approximately $90.8 million in alleged damages.

According to Xu’s BrokerCheck report, the claimant is a company organized in the British Virgin Islands. The claimant alleges violations of FINRA standards and the Securities and Exchange Commission’s Regulation Best Interest in connection with allegedly unsolicited derivative and index-option trades.

The claimant contends that the trading resulted in a margin deficit on October 10, 2025. The arbitration was served on November 26, 2025, and is identified as FINRA Case No. 25-02564.

Xu’s BrokerCheck report lists the customer dispute as pending. The reported allegations have not been proven or formally adjudicated. (FINRA)

Reported dispute details:

  • Firm: J.P. Morgan Securities LLC
  • Products: Derivatives and index options
  • Alleged damages: $90.8 million
  • Case number: 25-02564
  • Status: Pending

2. Richard W. Barber — CRD No. 1298800

Richard W. Barber’s BrokerCheck record reports a pending federal civil action involving alleged damages of $40 million.

The complaint alleges that multiple defendants participated in a long-running securities-fraud scheme involving shares in private companies. According to the disclosure, investors were allegedly told that the companies had developed disruptive technologies.

The alleged conduct reportedly occurred from 2015 through 2023. The disclosure identifies the product as private-company equity and lists Glendale Securities as the employing firm connected to the reported activity.

The case is pending in the United States District Court for the Eastern District of Texas and is identified as Case No. 25-cv-00362-JCB. Barber’s disclosure notes that the $40 million figure concerns numerous defendants and is not attributed exclusively to Barber. (FINRA)

Reported case details:

  • Firm: Glendale Securities, Inc.
  • Product: Private-company equity
  • Alleged damages: $40 million involving multiple defendants
  • Court: U.S. District Court for the Eastern District of Texas
  • Case number: 25-cv-00362-JCB
  • Status: Pending

3. Matthew G. Fetui III — CRD No. 5511717

Matthew G. Fetui III is associated with Wells Fargo Clearing Services and faces a pending FINRA arbitration seeking more than $7 million in alleged damages.

According to Fetui’s BrokerCheck report, the claimant alleges that Fetui made unsuitable investment recommendations in August 2024. The products at issue are identified as exchange-traded funds.

The arbitration was filed on April 9, 2026, and is identified as FINRA Case No. 26-00779. Fetui’s report lists the matter as pending, meaning the reported allegations remain unresolved and have not been established through a FINRA hearing. (FINRA)

Reported dispute details:

  • Firm: Wells Fargo Clearing Services, LLC
  • Products: Exchange-traded funds
  • Allegation: Unsuitable investment recommendations
  • Alleged damages: More than $7 million
  • Case number: 26-00779
  • Status: Pending

4. Dimitrios K. Michelis — CRD No. 2920152

Former UBS Financial Services broker Dimitrios K. Michelis has a pending customer dispute involving alleged selling away, reverse churning, and an allegedly unsuitable securities-backed loan.

The claimants allege that Michelis participated in a fraudulent selling-away scheme and that investments in their UBS advisory accounts remained unchanged for years despite the fees associated with the accounts. One claimant also alleges that an unsuitable securities-backed loan was recommended.

The disclosure identifies approximately $4 million in claimed damages and lists the matter as FINRA Case No. 26-01133. The arbitration was filed on May 27, 2026.

Michelis’ BrokerCheck report also states that FINRA permanently barred him on August 10, 2026, after he failed to request termination of a prior suspension within the required three-month period. That regulatory bar is separate from the pending customer allegations and does not establish the merits of the arbitration claim. (FINRA)

Reported dispute details:

  • Former firm: UBS Financial Services Inc.
  • Issues: Selling away, reverse churning, and a securities-backed loan
  • Claimed damages: Approximately $4 million
  • Case number: 26-01133
  • Status: Pending
  • Regulatory status: Barred by FINRA on August 10, 2026

5. Youssef A. Zohny — CRD No. 6759406

Morgan Stanley broker Youssef A. Zohny faces a pending FINRA arbitration seeking $4.5 million in alleged damages.

According to BrokerCheck, the claimants allege that the investment strategy implemented in their managed accounts was inconsistent with the investment goals and asset allocation they had discussed with the broker.

The investments identified in the disclosure include direct investments, limited-partnership interests, listed equities, and exchange-traded funds. The reported activity occurred between June 2024 and April 2025.

The arbitration was filed on June 16, 2025, and is identified as FINRA Case No. 25-01252. The matter remains pending. (FINRA)

Reported dispute details:

  • Firm: Morgan Stanley
  • Products: Direct investments, limited partnerships, equities, and ETFs
  • Allegation: Account strategy allegedly differed from agreed objectives
  • Alleged damages: $4.5 million
  • Case number: 25-01252
  • Status: Pending

6. Clifford R. Reid — CRD No. 1905920

Former Reid & Rudiger broker Clifford R. Reid was permanently barred by FINRA following findings involving churning, excessive trading, high commissions, and Regulation Best Interest violations.

FINRA’s case concerned a high-volume, high-cost market-timing strategy involving large equity positions, short holding periods, and the use of margin. FINRA found that Reid and another representative exercised de facto control over customer trading and placed their financial interests ahead of their customers’ interests.

According to the final regulatory record, the trading generated approximately $548,566 in customer costs, including approximately $499,252 in commissions, and caused approximately $1.1 million in realized losses.

Without admitting or denying the allegations, Reid and the other respondents consented to the sanctions and entry of FINRA’s findings. FINRA permanently barred Reid on June 17, 2026. His BrokerCheck record also lists two pending customer disputes. (FINRA)

Regulatory-action details:

  • Former firm: Reid & Rudiger LLC
  • Issues: Churning, excessive trading, margin, and Reg BI violations
  • Reported customer costs: Approximately $548,566
  • Reported commissions: Approximately $499,252
  • Reported realized losses: Approximately $1.1 million
  • FINRA case number: 2019060647601
  • Sanction: Permanent bar effective June 17, 2026

7. Carmen D. Morrone — CRD No. 1898874

Carmen D. Morrone, associated with Realta Equities, has three pending customer disputes involving Delaware Statutory Trusts and alternative investments.

One arbitration alleges failures involving due diligence and disclosure concerning a DST investment and seeks approximately $237,817. That matter is identified as FINRA Case No. 26-00210.

A second arbitration makes similar due-diligence and disclosure allegations concerning a DST and seeks $1 million. It is identified as FINRA Case No. 26-00078.

A third pending dispute involves alternative investments and seeks approximately $561,303. Collectively, the three pending claims seek approximately $1.8 million in alleged damages. The reported allegations remain pending and unproven. (FINRA)

Reported dispute details:

  • Firm: Realta Equities, Inc.
  • Products: DSTs and alternative investments
  • Issues: Alleged due-diligence and disclosure failures
  • Combined alleged damages: Approximately $1.8 million
  • Pending disputes: Three

8. Daniel J. McClory — CRD No. 1390780

Daniel J. McClory faces a pending FINRA arbitration concerning private-placement investments allegedly offered through Boustead Securities.

According to McClory’s BrokerCheck disclosure, a former accredited-investor client alleges that certain private placements were unsuitable. The claimant seeks $950,000 in alleged damages.

The matter was served on October 25, 2025, and is identified as FINRA Case No. 25-02152.

McClory disputes the allegations in full. Because the arbitration remains pending, there has been no reported determination that he or the brokerage firm violated securities laws or FINRA rules. (FINRA)

Reported dispute details:

  • Firm: Boustead Securities, LLC
  • Products: Private placements
  • Allegation: Unsuitable recommendations
  • Alleged damages: $950,000
  • Case number: 25-02152
  • Status: Pending

9. Peter Sandler — CRD No. 2847717

Peter Sandler, formerly associated with Aegis Capital, is the subject of a pending FINRA arbitration involving private-placement investments.

The claimant alleges breach of fiduciary duty, unsuitable investments, material misrepresentations, material omissions, breach of FINRA rules, and breach of contract.

The damages are not specified. Aegis Capital reportedly made a good-faith determination that the alleged damages would equal or exceed $5,000.

The arbitration was filed on September 9, 2025, and is identified as FINRA Case No. 25-01901. Sandler’s BrokerCheck record lists one pending and two final customer disputes. (FINRA)

Reported dispute details:

  • Former firm: Aegis Capital Corp.
  • Products: Private placements
  • Issues: Suitability, disclosure, fiduciary duty, and breach of contract
  • Case number: 25-01901
  • Status: Pending

10. James F. Martin — CRD No. 1218618

Former Morgan Stanley broker James F. Martin is the subject of a pending customer complaint involving an alleged personal loan.

According to Martin’s BrokerCheck report, a customer’s attorney alleges that Martin solicited a $303,600 personal loan from the customer in December 2020. The customer further alleges that Martin refused to repay the loan unless the customer provided a broad legal release.

The disclosure identifies direct investments and limited-partnership interests as the product category and lists alleged damages of $303,600.

The complaint was received on April 2, 2026, and remains pending. The disclosure is a customer allegation and has not been formally adjudicated. (FINRA)

Reported complaint details:

  • Former firm: Morgan Stanley
  • Issue: Alleged personal loan from a customer
  • Alleged damages: $303,600
  • Status: Pending

What These Broker Disclosures May Tell Investors

The presence of a BrokerCheck disclosure does not, standing alone, establish that a broker committed misconduct. Investors should consider the complete record, including:

  • Whether the matter is pending or final;
  • Whether the broker denies the allegations;
  • The number and similarity of reported complaints;
  • The products and strategies involved;
  • The amount of the alleged losses;
  • Whether multiple customers report similar conduct;
  • Whether the brokerage firm approved the investments;
  • Whether the matter resulted in a settlement, award, dismissal, suspension, or bar; and
  • Whether FINRA or another regulator entered formal findings.

Investors should also distinguish between a customer allegation and a final regulatory action. Most of the matters in this roundup remain pending. The action involving Clifford Reid, by contrast, resulted in final FINRA findings and a permanent bar.

Common Warning Signs of Broker Misconduct

Investors may have grounds to investigate a potential FINRA claim when they experience substantial losses accompanied by warning signs such as:

Excessive Trading or Churning

Frequent buying and selling may generate commissions and other trading costs while making it difficult for the account to earn a profit.

Unsuitable Concentration

Placing a large portion of an investor’s net worth in one security, sector, private placement, options strategy, or illiquid real estate product can expose the investor to excessive risk.

Selling Away

Selling away may occur when a broker solicits an investment outside the brokerage firm’s approved systems or product offerings.

Misrepresentations and Omissions

Investors should receive accurate information about liquidity, valuation, fees, commissions, conflicts, market risk, and the possibility of losing principal.

Unauthorized or Undisclosed Discretionary Trading

A broker generally cannot exercise discretion over a customer’s account unless the customer and firm have provided the required authorization.

Customer Loans

Loans between brokers and customers are heavily restricted. An undisclosed or improperly approved loan may raise concerns under FINRA rules and brokerage-firm policies.

Failure to Supervise

Brokerage firms may be responsible for reasonably supervising their representatives, investigating warning signs, reviewing outside activities, and monitoring potentially unsuitable trading.

Investments Identified in These Matters

The complaints and regulatory records discussed above involve several complex or potentially high-risk products and strategies:

  • Index options;
  • Derivatives;
  • Exchange-traded funds;
  • Private-company stock;
  • Private placements;
  • Delaware Statutory Trusts;
  • Limited partnerships;
  • Alternative investments;
  • Securities-backed loans;
  • Margin trading;
  • Managed-account strategies; and
  • High-volume equity trading.

These products are not automatically improper. Problems may arise, however, when they are recommended without reasonable due diligence, appropriate risk analysis, accurate disclosures, proper authorization, or consideration of the investor’s financial circumstances.

Can Investors Recover Losses Through FINRA Arbitration?

Investors who suffered losses because of broker misconduct or inadequate brokerage-firm supervision may be able to seek compensation through FINRA arbitration.

Potential causes of action may include:

  • Unsuitable recommendations;
  • Violations of Regulation Best Interest;
  • Misrepresentation or omission;
  • Selling away;
  • Unauthorized trading;
  • Churning or excessive trading;
  • Overconcentration;
  • Negligence;
  • Breach of fiduciary duty;
  • Breach of contract;
  • Failure to conduct due diligence; and
  • Failure to supervise.

The strength of a potential case depends on the investor’s account statements, communications, risk tolerance, financial objectives, investment history, offering documents, and applicable filing deadlines.

Did You Suffer Investment Losses?

Sonn Law Group represents investors nationwide in FINRA arbitration, securities litigation, broker misconduct cases, investment-fraud matters, and claims involving brokerage-firm supervisory failures.

Investors who suffered losses involving options, derivatives, private placements, DSTs, alternative investments, margin trading, selling away, excessive trading, or unsuitable recommendations may have legal options for pursuing financial recovery.

Contact Sonn Law Group at 1-844-689-5754 for a free and confidential consultation.

This article summarizes publicly available regulatory and brokerage records. Pending complaints and arbitrations contain allegations that may be disputed, unresolved, or unproven. A disclosure does not establish that a broker or brokerage firm engaged in misconduct. Matters may be denied, withdrawn, dismissed, settled, or resolved without an admission or finding of liability. Past results do not guarantee future outcomes. Every investor claim depends on its particular facts, evidence, governing law, and filing deadlines.