Law Firms Beat FINRA to the Punch

Vernon Litigation Group and Dovin Malkin & Ficken, LLC filed a claim against Claus Foerster, a registered broker at Raymond James & Associates, Inc, months in advance of FINRA’s recent action that barred Mr. Foerster from the securities industry.

( — June 24, 2014) Naples, Florida — Just days ago, the Financial Industry Regulatory Authority Inc. (FINRA) barred Raymond James & Associates, Inc. registered broker Claus Foerster from the securities industry due to illegal and fraudulent activities. According to the FINRA action letter signed by Foerster, Claus Foerster’s deceptive practices began in 2000. Specifically, it appears that Foerster solicited at least 13 customers to invest in an alleged income-oriented entity by the name of S.G. Investments. Foerster allegedly developed an elaborate system where customers were instructed to first transfer funds out of their brokerage account and into their personal account. Then the clients were instructed to write a check directly to S.G. Investments. As FINRA’s investigation has now revealed, S.G. Investments was not an investment fund, but a bank account controlled by Foerster. All in all, Foerster allegedly amassed approximately $3 million from the scheme.

Months in advance of FINRA’s action barring Claus Foerster from the securities industry, the law firms of Vernon Litigation Group and Dovin Malkin & Ficken, LLC performed their own investigation, which indicates—according to a claim filed by the law firms on behalf one of their clients—that Raymond James & Associates’ advisor Claus Foerster was mismanaging client funds, in breach of his fiduciary duty and in violation of several securities laws.

Details of the Claim Against Mr. Foerster

According to the claim filed in FINRA arbitration on February 18, 2014, Claus Foerster (who was then registered with Citigroup) acted as the broker for a South Carolina couple. The elderly couple had owned a small shop and saved faithfully over the years for their retirement. Sadly, one of the spouses died. Nevertheless, the widow elected to continue to use ClausFoerster as her broker. As a result, when Foerster moved to Morgan Keegan—now Raymond James—the client followed Foerster and transferred the accounts to Raymond James. The client made it clear that the primary objective of the accounts was income, as the widow relied on the accounts to supplement Social Security payments. Further, the widow expressed a desire to invest in a conservative manner and fully trusted Claus Foerster to take care of the investments and accounts.

Despite the client’s objectives as well as Foerster’s duties as advisor for the widow, Foerster instead allegedly mismanaged the funds; allegedly made an excessive number of trades that benefitted only Foerster and his firm, and allegedly left all of his clients (including the widow) with considerable losses. According to the claim, Mr. Foerster also purchased a number of risky stocks and made large commissions on each trade. Thereafter, he held several stocks that suffered substantial unrealized losses and began charging the client a quarterly management fee. In the end, the client’s accounts were left with substantial losses.

What the Claim Means to Investors

In engaging in such ill-advised and self-motivated trades, the claim filed by Vernon Litigation Group and Dovin, Malkin & Ficken alleges that Mr. Foerster and Raymond James breached their fiduciary duty, committed fraud, acted negligently, and violated the South Carolina Uniform Securities Act. The claim establishes that Foerster’s illegal and fraudulent behavior resulted in considerable losses for the elderly client.

The law firms of Vernon Litigation Group and Dovin Malkin & Ficken, LLC encourage all clients of Claus Foerster and Raymond James & Associates to contact them if they are concerned about their investments. As Vernon Litigation Group and now the FINRA regulators have uncovered, Mr. Foerster was engaged in illegal activities during his time at Raymond James and likely mismanaged numerous clients’ funds. The top-rated securities attorneys at the law firm of Vernon Litigation Group have decades of experience litigating and arbitrating securities disputes. The firm has successfully handled several cases against multiple firms, including Raymond James, and will continue to investigate the actions of this and other brokerage firms. To schedule your consultation, please call Vernon Litigation Group toll-free at 1 (877) 649-5394 or by email at:

About Vernon Litigation Group

Vernon Litigation Group represents clients in a number of legal matters from courtroom litigation to arbitrations. We are both financial advisors and advocates and believe that the people are best served by a continual focus on areas of the law closely related to investment and business.

Vernon Litigation Group

999 Vanderbilt Beach Road, Suite 200, The Fifth Third Center
Naples, Florida United States 34108

(239) 319-4434