As reported in the Sun Sentinel, three dozen mostly elderly South Florida investors, including a Holocaust survivor, have been awarded more than $7 million in damages in a case involving former Boca Raton, Florida stockbroker Gary J. Gross.
The award, issued Aug. 14, came from a federal Financial Industry Regulatory Authority arbitration, based on investors’ allegations of fraud. Their complaints were consolidated into a single case.
The investors said they are angry that state regulators didn’t do more to protect them. They also face an uphill battle to get any money from Gross, who has declared bankruptcy.
“There are no assets to go after,” said Gross’s bankruptcy attorney, Charles Cohen.
The arbitrators decided Gross violated state law and Financial Industry Regulatory Authority rules by selling unsuitable securities.
Many of the investors said he loaded their portfolios with private investments in public companies that were difficult to sell when the investors needed cash.
Gross has a long record – about 100 pages – describing disputes with customers and regulators. His former employers, including Axiom Capital Management, have paid $4.6 million to settle 33 disputes over eight years, according to the industry publication Registered Rep.
Last December, the Securities and Exchange Commission reached a settlement with Gross after investigating investor complaints. The settlement bans him from working for any broker or investment adviser. Gross settled that case without admitting or denying guilt. He was not ordered to pay any money to investors.
Financial Industry Regulatory Authority records show he stopped working with Axiom Capital Management in January 2007 after the securities fraud had already taken place.
The customers said they met Gross through mutual friends or connections at a synagogue. They said he is a very personable man who often took his clients to dinner or attended services with them.
The investors said they never checked Gross’s disciplinary record, which reveals that he had been named in numerous customer complaints related to securities fraud, some while employed with Axiom Capital Management.
FBI agents opened an investigation of Gross in March 2008, said a spokeswoman for the Miami office of the agency. The agents discussed their investigation with the U.S. attorney, but the inquiry was closed in October, said Special Agent Judy Orihuela. There was not enough evidence to file charges, Orihuela said.
Florida’s main securities regulator, the Florida Office of Financial Regulation, renewed Gross’s state securities license in 2003, with a provision that his employer watch his work closely. A spokeswoman said the office looked into investor complaints at that time, but felt it didn’t have enough to deny the license or to prevail in a dispute with Gross.
Rosalind Drabin, whose husband, Henry, is a Holocaust survivor, said she gave Gross about $800,000 to manage. Four months later, she had only $280,000, she said.
Investor Marian Green, of Lake Worth, said she has returned to work at age 79 because she and her husband lost so much money in investments with Gross. She said her children now must help support them.
Sheila Kramer said Gross told her she had almost $2 million when her account actually was worth $112,000.
If you have questions about investments you made with Gary Gross or Axiom Capital Management, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 312-238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.