A group of San Luis Obispo County investors – clients of Jeffrey Forrest of WealthWise LLC in San Luis Obispo who had lost millions in the failed APEX Equity Options Fund – has been awarded more than $8.8 million in damages by the Financial Industry Regulatory Authority, an independent regulator of U.S. securities firms.
The FINRA arbitration panel found that Forrest, who had been an Associated Securities broker, was liable for selling what amounted to a risky hedge fund to clients, according to attorneys representing the 16 households involved in the case. The fund, worth more than $40 million, that collapsed in August 2007.
Forrest’s representations to his clients about the “safety and liquidity of their investments in APEX, in light of what Forrest knew and understood from the written offering documents constitutes fraud or deceit within the meaning of California law,” said an attorney for the investors.
As well, the FINRA panel found that Associated Securities was also liable for Forrest’s conduct because of “its failure to diligently and properly supervise Forrest’s activities,’’ said attorney Robert Uhl.
The award represents 100 percent of the money the firm’s clients had invested in the APEX fund.\
The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization overseeing brokerage firms and their registered representatives in the United States. Established in 2007 through the merger of the NASD and the regulatory functions of the New York Stock Exchange, FINRA operates under the authority of the Securities and Exchange Commission (SEC). Its primary role is to ensure that the securities industry operates fairly and transparently, protecting investors and maintaining market integrity.
FINRA enforces rules and regulations governing the conduct of financial professionals and firms, conducting routine examinations and investigating potential violations. It also provides a platform for resolving disputes between investors and firms through its arbitration and mediation services. In addition, FINRA offers educational resources for investors to enhance their understanding of financial markets and products.
The organization plays a critical role in maintaining confidence in the financial system by promoting ethical behavior, implementing rigorous compliance standards, and fostering transparency. By overseeing a vast network of brokerage firms and individual brokers, FINRA helps ensure that investors are treated fairly and that financial markets operate efficiently and equitably.