Finra arbitration panel tags Signator Investors for $1.6 million in selling-away case

Three clients of former broker at Hancock unit receive award for losses in failed land deals

Mar 5, 2014 @ 1:49 pm

By Bruce Kelly

finra, arbitration, selling away, broker
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Signator Investors Inc. is on the hook for nearly $1.6 million from a Finra arbitration panel award stemming from a former broker's clients investing in failed land deals in Texas.

The three-person Financial Industry Regulatory Authority Inc. panel Tuesday issued the award to three clients of the former broker, James Robert Glover.

The three claimants, Edward Blank, Doreen Baker Blank, and Della A.B. Baker, who died in 2012 and was represented by her estate, first invested with Mr. Glover in 1998, according to their attorney.

They met Mr. Glover in a church near Baltimore, said Lance McCardle, the claimants' attorney and a partner with Fishman Haygood Phelps Walmsley Willis & Swanson.

“The Finra arbitration panel awarded our clients almost $1.6 million for the losses they suffered in this selling-away case,” Mr. McCardle said. “Our clients lost all of their retirement savings as a result of Glover's breach of fiduciary duty and fraud and Signator's failure to supervise Mr. Glover during the 14 years he worked at Signator in the Towson, Md., office.”

John Hancock Financial Network Inc. owns Signator Investors, which has about 1,600 registered representatives and investment advisers.

John Hancock Financial Network spokeswoman Melissa Berczuk didn't respond to phone calls by 3 p.m. ET on Wednesday to comment.

Mr. Glover couldn't be reached for comment.

He was permitted to resign from Signator in 2012, according to his BrokerCheck report.

In it, Signator alleged that his resignation was due to a “failure to disclose outside business activities, conversion of client funds and other potential representative misconduct.”

“Our clients met Mr. Glover through the local Mormon church in Maryland,” Mr. McCardle said. “We believe this award will be of interest to others that invested with Mr. Glover as customers have already filed upwards of 40 complaints against Mr. Glover stemming from these investments.”

The claimants alleged fraud, negligence and other causes relating to their investments in three private Texas real estate deals: Colonial Funding; Colonial Tidewater Realty Income Partners and Texas Real Estate Properties, according to the award.

The award is in three parts: $954,000 in compensatory damages; $181,000 in interest; and $454,000 in legal fees. Although Signator is jointly liable with Mr. Glover for the compensatory damages and interest, it is solely liable for the legal fees.

Signator has maintained that it didn't know that Mr. Glover was selling the Texas real estate deals, Mr. McCardle said.

That “exposed that [Signator] was not following their own supervisory procedures at the time,” he said.

Mr. Glover “held himself out as trustworthy and pious,” Mr. McCardle said. “He went to Europe with my clients and visited them annually in California, where they lived.”

“Colonial Tidewater Realty at one time was a real thing and investing in apartment complexes and retirement communities. There is no telling if or when it became a Ponzi scheme,” Mr. McCardle said.

“It paid investors monthly interest, but in March 2012 those payments were cut to half,” he said. “In October 2012, the private placements stopped paying altogether.”

Finra and the Securities and Exchange Commission contacted Mr. Glover about Colonial Tidewater, Mr. McCardle said.

According to the award, Signator filed a claim against Mr. Glover, and the three arbitrators found him liable for breach of contract, fraud and negligence and ordered him to pay Signator $1.35 million.

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