A hearing in the first of four arbitration cases filed against Jeffrey Forrest of WealthWise LLC in San Luis Obispo is scheduled to be held late this year.
Beverly Hills attorneys representing San Luis Obispo County investors who were clients of Forrest and lost millions in a failed equity investment fund, said the first hearing begins Dec. 1 in Los Angeles.
The claims are being sought against Forrest and Associated Securities, an El Segundo-based broker-dealer with which Forrest was registered until last year.
Investors claim Forrest —charged in the civil cases with breach of fiduciary duty and fraud— told them the principal they invested in the APEX Equity Options Fund, a $46 million equity fund, would be protected. Attorneys say that wasn’t the case and allege Forrest sold investments in several businesses that were unsuitable for some of his clients.
The first claim, filed with the Financial Industry Regulatory Authority in October 2007, represents seven households that collectively invested $5 million in the APEX Equity Options Fund, which was wiped out in August 2007.
In all, the losses stemming from the four claims now total nearly $24 million. In some instances, clients had used their savings or borrowed against the value of their homes to invest, according to legal documents.
FINRA arbitration is a dispute resolution process administered by the Financial Industry Regulatory Authority (FINRA). It provides a forum for resolving monetary disputes between investors and securities firms or brokers without going to court. The process is generally faster and less formal than traditional litigation, and decisions are made by a panel of arbitrators who are knowledgeable in securities law and industry practices. Arbitration through FINRA is binding, meaning the decision is final and enforceable in court. This process is commonly used for disputes involving investment losses, unsuitable recommendations, or misrepresentation. Investors must agree to arbitration in their brokerage agreements, often as a condition of opening an account. While arbitration can be a more efficient way to resolve disputes, it also has limitations, such as limited appeal options and potentially high costs. Despite these challenges, FINRA arbitration remains a crucial mechanism for investor protection and dispute resolution in the securities industry.