FINRA Orders Oppenheimer to Pay $14 Million to Ponzi Scheme Victims

The Financial Industry Regulatory Authority ordered Oppenheimer & Co. Inc. to pay nearly $14 million to several victims of a Ponzi scheme perpetrated by a former Oppenheimer broker that targeted 400 elderly investors.

The scheme involved investors who bought shares in an alleged Ponzi scheme, Horizon Private Equity III fund, created by John J. Woods, a former Oppenheimer broker.

Horizon was launched in 2008 when Woods worked from an Atlanta Oppenheimer branch office.

In August 2021, the SEC charged Woods and his firm, Livingston Group Asset Management Company (doing business as Southport Capital) with multiple counts of securities fraud for operating Horizon as a $110 million Ponzi scheme.

A panel of three FINRA arbitrators found Oppenheimer liable and awarded $6,989,702 in compensatory damages to the claimants. The panel also awarded $6,989,702 in punitive damages, for a total of $13,979,404 in monetary sanctions.

The panel said Oppenheimer failed to supervise Woods and others engaged in the scheme which “constituted gross negligence and that contributed to the damages suffered by claimant.”

According to a report by InvestmentNews, Oppenheimer indicated it will fight the award.

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