The law firm of Oakes & Fosher has represented clients in FINRA arbitration claims based on the actions of former stockbroker David Karandos. The latest litigation resulted in an award of over $400,000 for a 79 year old retiree and widow. Mr. Karandos placed her husband’s retirement assets in extremely risky alternative investments and extremely illiquid life settlements. Oakes and Fosher is presently investigating any cases of alleged misconduct by securities broker David Michael Karandos. According to his publicly available FINRA BrokerCheck report, David Karandos has been the subject of multiple customer disputes and regulatory actions over the course of his career.
David Karandos was an Indiana-based securities broker. He had worked in the securities industry for twenty eight years. During his career, he had been registered with six different securities firms. He is no longer working in the securities industry in any fashion.
His Registrations
- Mimlic Sales Corporation (1989-1989)
- Merrill Lynch, Pierce, Fenner & Smith (1989-2003)
- UBS Financial Services (2003-2008)
- Morgan Stanley & Co (2008-2009)
- Morgan Stanley Smith Barney (2009-2012)
- Dinosaur Financial Group (2013-2019)
The Allegations
- In August 2003, a customer alleged that David Karandos had recommended unsuitable investments, and additionally that he had executed unauthorized transactions. This case was settled for $27,500 in damages.
- In May 2011, a customer alleged that Karandos had breached fiduciary duties owed to the Indiana State Teachers Association (ISTA) by recommending and/or permitting the purchase of an excessive amount of alternative investments in ISTA’s investment portfolio. This case was settled for $493,000 in damages.
- In December 2011, a customer alleged that Karandos had breached fiduciary duty through unsuitable recommendations of volatile and high-risk investments. This case was settled for $313,564 in damages.
- In October 2020, a customer alleged that Karandos had made unsuitable investments from 2014 to 2018 and improperly withdrew funds from other family accounts from 2016 to 2018. This case is currently pending, and the customer is seeking $436,00 in damages.
- In August 2021, Karandos was the subject of the customer’s complaint against his member firm that alleged the following causes of action: breach of fiduciary duty, common law fraud, breach of contract, negligence/negligent misrepresentation/omission, negligent hiring, restitution, and negligent supervision. This case went to arbitration where Oakes & Fosher represented them, and the customer was awarded $314,564 in damages.
- In July 2022, Karandos was officially sanctioned by FINRA following his refusal to appear for on-the-record testimony requested by FINRA. Karandos was barred from acting as a securities broker in all capacities indefinitely.
Alternative Investments
Alternative investments are privately traded investment funds not sold on any public securities exchanges. These types of investments can be very harmful to investors due the high level of risk,
illiquidity, and extreme high cost structure. The illiquidity of these investments is a direct result of their private, unregulated nature. Publicly traded equities have a guaranteed redemption, so investors can liquidate their shares for the stated value at any moment. Those managing these private investment funds usually attempt to retain cash infused for as long as possible to continue funding operations, so only a finite number of buyouts are typically offered in scheduled increments. Investors are also almost always offered buyout offers substantially less than what they are told their shares are valued at. These alternative investments are mostly recommended out of significant conflicts of interest that arise because of the often excessively high commissions brokers receive when recommending these products. These commissions can be as high as ten percent of the investor’s principal investment. Securities brokers like David Karandos have a legal obligation to always act in the best interests of their customers. Brokers need to conduct the necessary due diligence to only recommend suitable or appropriate investments. Retirees, or those with limited liquidity and net worth should not be sold a high-risk, illiquid alternative investments.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages.
Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with David Karandos, please contact Oakes & Fosher for a free and private consultation. We handle cases on a contingency basis, which means there are no fees charged unless we collect for you.
