Two clients of A.G. Morgan Financial Advisors have won a $2.5 million arbitration award after alleging the firm’s two advisors breached their fiduciary duty in the handling of their funds, reports Financial Advisor.
The clients, Dana Woolfson and John Kaprat, filed their statement of claim in April 2024 against Massapequa, New York-based A.G. Morgan and the firm’s two advisors Vincent Jerome Camarda and James Edward McArthur.
It was alleged that the clients’ money was placed in two private placement funds owned and run by A.G. Morgan, Camarda and McArthur. The funds were the Omni Diversified Fund and Windsor Capital Fund II. Woolfson and Kaprat claimed there had been breach of fiduciary duty, misrepresentations and omissions, failure to supervise, negligence, gross negligence, violation of Financial Industry Regulatory Authority rules and violation of state and federal securities laws.
Following an evidentiary hearing, a FINRA arbitration panel determined that Camarda, A.G. Morgan’s owner and CEO, will pay $1.4 million in compensatory damages, $11,249 per month from the date of the award until the payment is made in full, and $227,500 in attorneys’ fees. McArthur, the firm’s president and chief compliance officer, will have to pay $443,354 in compensatory damages, $3,461 per month from the date of the award until the payment is made in full, and $70,000 in attorneys’ fees.
A.G. Morgan will have to pay $332,515 in compensatory damages, $2,596 per month from the date of the award until the payment is made in full, and $52,500 in attorneys’ fees. In addition, the three respondents will pay $10,000 as a sanction for failure to comply with discovery requests and other orders and $1,400 to reimburse Woolfson and Kaprat for filing fees.
The two clients had requested compensatory damages of $2 million, plus under-performance damages, attorneys’ fees, costs, punitive damages and interest. Camarda, representing both himself and A.G. Morgan, did not attend the hearing and the arbitration proceeded without him.
A call to the firm was not returned prior to publication of the report.
Regulators have previously taken enforcement actions against A.G. Morgan, Camarda and McArthur. In 2022, they were charged by the Securities and Exchange Commission with unlawfully offering and selling securities in connection with an over $500 million unregistered fraudulent offering with lending company Complete Business Solutions Group Inc. d/b/a Par Funding.
The SEC stated that the defendants raised over $75 million from more than 200 investors in connection with Par Funding’s offering from at least August 2017 through July 2020, and received compensation of more than $7 million for doing so. The defendants allegedly offered and sold securities to investors without approval from the registered broker-dealer with whom they were associated. The complaint also alleges that in 2017, AGM and Camarda failed to inform advisory clients that AGM had borrowed, and had not fully repaid, approximately $750,000 from Par Funding.
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