Woodland Hills-based stock brokerage firm RJR Capital Group has been ordered to pay $1.99 million, and additional costs, to clients by National Association of Securities Dealers arbitrators, in a binding decision. A lawyer for the clients, Salvador Gomez and Neda Kordich, told a three-man NASD arbitration panel that RJR Capital had improperly invested the clients” money into “more than 50” unsuitable limited partnerships, oil and gas deals and private placements in a four-year period ending 1995. About 25 of the 50 investments performed badly, said the lawyer. The arbitration proceedings were held in August and September in the Inter-Continental Hotel in downtown Los Angeles. and the NASD decision became final last month.
Conflicts claimed Moreover, partners of the RJR Capital Group were often officers, shareholders or directors in the entities into which Gomez’s and Kordich’s money was invested, argued Gomez’ and Kordich’s lawyer Phil Aidikoff, of the Los Angeles-based law firm Aidikoff & Kesluk. “There were clear conflicts of interest in what RJR Capital was doing,” said Aidikoff. Gomez and Kordich are partners in the major manufacturer Avalon Glass & Mirror, in Carson. Last week, Aidikoff said it is sometimes difficult to win judgements in favor of wealthy clients in NASD arbitration proceedings. “There is a bias that anyone wealthy also knows what the risks are in any investment or situation – but let me tell you, that is not true,” said Aidikoff.
RJR Capital never offered to settle the dispute, said Aidikoff. “There is a recent move towards mediation by the NASD as an alternative to arbitration. However, that requires both parties to really want to settle the case. In this ease, the opposing party never offered to settle, which means mediation would have been useless,” he said.
Officials at RJR Capital Group last week declined to comment. The evidence presented at the arbitration proceeding also revealed that the brokerage violated NASD rules by selling oil and gas deals and setting up a side company to receive commissions on sales, said Aidikoff.
To date, said Aidikoff, the NASD has expressed no interest in the RJR Capital Group matter. “Nobody has called me to find out what is going on,” he said.