A FINRA arbitration panel has ordered an RBC advisor and his firm to pay an elderly client $723,000 for concentrating her investments in oil and gas master limited partnerships.
The senior, who at times had as much as 95% of her portfolio in oil and gas securities, suffered substantial losses when oil prices corrected in late 2014 and 2015, according to her attorney Guy Burns of Tampa, Florida-based law firm Johnson, Pope, Bokor, Ruppel & Burns.
"They were negligent in failing to diversify her portfolio," Burns said.
The advisor, Bruce Cameron of Norwell, Massachusetts, had had the client for about 30 years. She was 80 at the time she began to incur losses on the investments, according to Burns.
Cameron and RBC Wealth Management contended that the client had been invested in oil and gas "MLPs" for a number of years and had never complained. Their argument, however, failed to sway the arbitration panel because they never told their client about the risks of not having a diversified portfolio, Burns explained.
Cameron and the firm also argued that the client wanted higher income and that the oil and gas investments afforded greater returns than would be available in other markets.
That argument, too, fell flat as the client's investment objective was growth with moderate risk, not aggressive income as Cameron and the firm claimed, according to Burns.
"We are disappointed in the panel’s decision and we are currently reviewing our options regarding the ruling," Jonell Lundquist, a spokeswoman for RBC Wealth Management, said in a statement.
The attorney for Cameron and RBC, Tanya Lambrechts of Florida law firm Bressler, Amery & Ross, did not respond to an email seeking comment. Cameron did not return a phone message.
Cameron and RBC were ordered to pay the client $688,000 in compensatory damages as well as more than $35,000 to cover her legal costs. They were also liable for interest on the $688,000 award.
"We were pleased that the panel understood the nature of the claim and the level of the inappropriate activity and made the appropriate decision," Burns said.