Securities Lawyers Blog
The law offices of Gana Weinstein LLP recently filed a complaint with the Financial Industry Regulatory Authority (FINRA) on behalf of a former NFL athlete alleging that the brokerage firm Resource Horizons Group LLC (Resource Horizons) failed to supervise Robert Gist (Gist), one of the firm’s associated persons.
The claimant came to know Gist in the 1980s while playing in the NFL. The claimant knew that his NFL earnings would provide him with enough money to save for his retirement and support his lifestyle after retiring from the NFL and wanted Mr. Gist to prudently manage the funds. The claimant trusted Gist through many years of friendship and Gist was invited to the claimant’s family events and functions.
In 1991, Gist solicited the claimant to continue to invest with him at his new firm, Gist, Kennedy & Associates, Inc, (Gist, Kennedy) which also operated as a law firm. According to the complaint, Gist told the claimant that he could invest the couple’s retirement assets and an educational trust the claimant established for the benefit of their children and produce an income of between 7 to 10%.
According to the complaint, the claimant received interest payments from Gist for years, received fictitious account statements every six months together with false representations of the sale or purchase of different income producing bonds. The complaint alleged that none of Gist’s representations made on the account statements and investment holdings were true and that in fact, Gist converted the claimant’s funds.
The claimant’s complaint alleged that Resource Horizons thoroughly failed in their obligation to monitor and supervise Gist’s business activities and ignored numerous “red flags” of misconduct over a 10 year period. The complaint alleged that Gist had a long and trouble history of accusations of misappropriation of client funds, fraud, failing to disclose information to his registering brokerage firm, and IRS tax liens.
On May 31, 2013, the Securities and Exchange Commission (SEC) filed a complaint for injunctive and other relief against Gist, alleging that Gist along with Gist, Kennedy committed fraud and effected securities transactions without being registered as a broker-dealer. The court ordered Gist to pay $5,400,000 in disgorgement of ill-gotten gains from his misappropriation of investor funds.
The SEC found that in total, Gist convinced approximately 20 of his customers to transfer their investments, held in accounts with Resource Horizons to Gist Kennedy. The SEC also alleged that Gist also solicited approximately a dozen new customers to invest directly through Gist, Kennedy. The SEC found that once Gist obtained customer funds, Gist converted the funds for his personal use and expenses, for the operation of ENCAP Technologies, LLC (ENCAP), a company that Gist was president of, and for making payments to other Gist, Kennedy, customers in order to continue to perpetuate the scheme.