The law firm of Oakes & Fosher is presently investigating the possible misconduct of former securities broker Floyd Powell. According to his publicly available FINRA BrokerCheck report, Floyd Powell has been the subject of multiple customer disputes.

Floyd Powell was an Alabama based securities broker. He worked in the securities industry for twenty-five years. During his career, he was registered with three different securities firms.

His Registrations

  • Metropolitan Life Insurance Company (1992-2007)
  • MSI Financial Services (1992-2017)
  • MML Investors Services (2017-2018)

The Allegations

Floyd Powell was officially sanctioned by FINRA in February 2019. The findings in this matter state that he became involved in a private security related to the Woodbridge Group of Companies. The Woodbridge Group of Companies housed multiple different private investment funds. These “alternative investments” were not traded on any public securities exchanges and were very poorly regulated. This allowed securities brokers to misrepresent these Woodbridge securities as safe and consistently lucrative–even though nothing could actually be further from the truth.

The truth is that alternative investments like these Woodbridge securities are incredibly speculative and illiquid. They are also accompanied by extremely high upfront fees that can drastically drain investor principals. Broker commissions for alternative investments can be as high as ten percent of the investor’s principal. Compounded with other upfront fees, this can drain an investor’s principal of up to seventeen percent, just for the opportunity to invest. When an investor’s principal investment is lowered that drastically, it becomes almost impossible for them to see a return on their investment under anything other than exceptional market conditions.

It is true that most alternative investments are unsuitable; however, the Woodbridge Group of Companies took it to an entirely different level. Along with being incredibly unsuitable, these Woodbridge securities were also entirely fraudulent. The Securities and Exchange Commission described Woodbridge as a massive Ponzi scheme that spent five years defrauding approximately 8,400 investors–most of which were elderly. Hundreds of securities brokers, like Floyd Powell, sold promissory notes to investors that they claimed were backed by mortgages. Investors were promised that they would receive an annual interest rate of 5 to 8 percent that was to be paid to them in monthly distributions. The investors were told that Woodbridge’s business model was to act as a private mortgage provider; however, the company actually did very little of this. Since the promissory notes were not actually backed by mortgages, no financial growth was actually taking place. Because of this, the investors’ monthly distributions were being paid out by soliciting funds from later rounds of investors. This, like all Ponzi schemes, continued like this until the entire thing collapsed.

According to FINRA, Floyd Powell sold almost $3.5 million worth of Woodbridge notes to thirteen investors–eleven of which were member firm customers. For his part, Powell received a total of $103,598 in commissions. Floyd Powell allegedly did not receive his member firm’s approval before he engaged in these private securities transactions. Due to these allegations, he was barred by FINRA from acting as a securities broker in any fashion.

Multiple customers filed claims against Floyd Powell’s member firm due to his alleged involvement in the Woodbridge Group of Companies. Most of the customers have alleged that they were highly unsuited to be invested in alternative investments and that Floyd Powell failed to disclose, or misrepresented, material facts about Woodbridge. Four of these cases were settled for a total of $246,500 in damages. One of the cases is currently pending. The customers in this case are seeking almost $3.2 million in damages.

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 Floyd Powell, please contact Oakes & Fosher for a free and private consultation. Oakes & Fosher handles cases on a contingency basis, which means there are no fees charged unless we collect for you.