A former compliance officer for broker-dealer Cabot Lodge is suing the firm's owner, Jacob Frydman, alleging that he was fired after he reported “certain improprieties” to authorities, including the Financial Industry Regulatory Authority Inc.
“Between the dates of March 31, 2014 and Oct. 31, 2014, there were numerous transactions that were cause for concern, and in some instances, in complete violation of the law,” according to the plaintiff, Albert Akerman, who filed the complaint on Friday in New York State Supreme Court.
The specific details of those transactions were redacted in the complaint.
According to the complaint, Mr. Akerman “acted in the best interests of the company and took action by reporting certain improprieties to the proper authorities, including Finra.” He was also aware that Mr. Frydman and Cabot Lodge CEO Craig Gould were “under investigation by Finra, and Finra had referred its findings to its enforcement division.”
Mr. Gould, who was named in an amended complaint filed Monday, did not return a call Tuesday morning seeking comment.
A Finra spokeswoman, Michelle Ong, did not return a call for comment.
On Dec. 15, Mr. Akerman was told by Mr. Frydman and Mr. Gould that he was being “terminated” from his job as compliance officer at Cabot Lodge.
According to his profile on BrokerCheck, Mr. Akerman was “discharged” from Cabot Lodge. Cabot Lodge management “has filed a restraining order against Mr. Akerman and the recipients of the information to not allow further dissemination and to destroy all documents,” according to BrokerCheck.
Mr. Akerman has no other reported events on his BrokerCheck profile.
In his complaint, Mr. Akerman said he was "terminated for his reluctance to follow (Mr. Frydman's) mismanagement directives and overlook other violative actions.”
Mr. Frydman is currently engaged in an ongoing legal dispute with his former partner, Eli Verschleiser; in October, Mr. Frydman sued Mr. Verschleiser in federal court in New York, alleging he had walked away from the firm with data about deals and potential business partners.
In a statement, Mr. Frydman said that Mr. Akerman sold company information to Mr. Verschleiser. “As such, Mr. Akerman was fired by Cabot Lodge Securities,” according to the statement. “In an effort to resurrect his career and reputation, he has filed this frivolous lawsuit. A motion to dismiss the Akerman lawsuit will be filed shortly after the papers have been served.”
Mr. Akerman, a 30-year veteran of the securities industry, is seeking a judgment of at least $500,000, the amount he contributed to the firm to become a limited partner.
Cabot Lodge, a small retail broker, is also the wholesaling and marketing broker-dealer for United Realty Trust Inc., a nontraded REIT that has faced roadblocks in its attempts to raise capital. Cabot Lodge wholesalers are attempting to raise $1 billion in the REIT's IPO; so far, the REIT has only $45.8 million in assets, according to its most recent quarterly report.
In May 2013, the REIT halted its initial public offering after its former marketing broker-dealer, Allied Beacon Partners Inc., ran afoul of industry net-capital regulations.
Allied Beacon, lost a Finra arbitration award of $1.6 million earlier in 2013 and didn't have the money on hand to pay the award, causing the net-capital violation. The firm eventually was expelled from the industry by Finra, with many brokers moving to Cabot Lodge.
Mr. Akerman is a veteran of the nontraded REIT industry. From 2005 to 2009, he was an executive with David Lerner Associates Inc., the marketing broker-dealer for the Apple branded REITs. In 2012, Finra fined David Lerner $2.3 million and ordered it to pay restitution of $12 million to clients for unfair sales practices in one Apple REIT and excessive markups on municipal bonds.