BEFORE THE FINANCIAL INDUSTRY REGULATORY AUTHORITY

IN THE MATTER OF ARBITRATION BETWEEN:

NAMES OF 29 CLAIMANTS REDACTED

Claimants

V. FINRA CASE NO. ______________

RAYMOND JAMES & ASSOCIATES, INC.

and THOMAS O'BRIEN

Respondents

STATEMENT OF CLAIM

1. Claimants all had accounts with Respondent Raymond James & Associates, Inc.

("Raymond James") at its branch at 401 Market Street in Shreveport Louisiana. Most previously

had accounts with Morgan Keegan before it was acquired by Raymond James, and maintained

their accounts with the new company whose offices and brokers remained the same. Claimants

believed Raymond James to be a reputable national brokerage company that would hire only

competent, reliable, honest brokers and that the company would protect their interests and their

assets. Claimants were unsophisticated investors who relied on Raymond James to protect and

grow their investments

J. Edward Lyons ("Eddie") became a registered representative in 1983 and continued to

be employed as a stockbroker until he was fired by Raymond James in April 2017 "due to

customer allegation of unauthorized trading."1 He started his career with a firm called Capitol

Securities Group and then joined Morgan Keegan in 1993. Morgan Keegan was acquired by

1
See Exhibit A - CRD of J. Edward Lyons
Raymond James in 2013, and Eddie was thus a Raymond James employee for the next four

years. During his 34 years in the brokerage business, he built up a sizable book of business with

clients throughout the Louisiana-Texas-Arkansas area with the majority of clients residing in the

Shreveport, Louisiana area. Eddie was well known in Shreveport, was well liked and was a

championship golfer. He made a good living as a stockbroker. His clients, including Claimants,

believed Eddie was honest, competent and had their best interests at heart. They trusted him to

and Raymond James to manage their sizable portfolios.

Most of Eddie's clients, including Claimants, were conservative investors who had

limited knowledge of and sophistication in investments in securities. They communicated their

objectives and risk tolerance to Morgan Keegan and Raymond James and to Eddie himself. They

trusted Eddie to manage their portfolios, often their life savings, in a prudent manner. And they

expressed that expectation to Eddie and Raymond James. Some Claimants acquired Eddie as

their broker when their previous Morgan Keegan broker, Blocker Thornton, died in 2011 after

which their accounts were "assigned" to Eddie by Morgan Keegan.

For some reason or reasons, possibly to be determined through discovery, Eddie at some

point began a pattern of recklessly trading in many of his client accounts, including those of

Claimants, without authorization of the clients. Without ever contacting the client, he would

simply sell securities in a client's account thereby generating a commission for himself and

Raymond James. He would then use the funds from the sale to purchase securities in the client's

account, again without any authorization and again generating a commission for himself and

Raymond James. Claimants had not given Eddie and Raymond James discretion to trade in their

account. Unauthorized trading is prohibited by FINRA Rules and securities laws. The securities

he purchased without authorization were, to an overwhelming extent, risky, speculative oil & gas

2
master limited partnerships ("MLPs") and, to a lesser extent, unit investment trusts ("UITs").

The MLPs that he selected for purchase were not the top-level MLP investments or even the

mid-level MLPs. Instead they were highly leveraged and the riskiest in the oil and gas MLP

universe with names like Linn Energy, Memorial Production Partners, Calumet Partners and

Cushing MLP Funds.

Not only were these speculative, risky MLPs unsuitable for Claimants' accounts -

including retirement accounts, trusts for elder persons, family partnerships designed to preserve

assets, a charitable organization that feeds the homeless - but they also caused the accounts to be

overly concentrated in one sector of the economy, thereby putting entire client portfolios at risk.

And as should have been foreseen, Linn and Memorial both went bankrupt within three years of

purchase. Calumet lost 85% of its value and the Cushing Funds lost between 50% and 75%.

Client portfolios, during a strong bull market, were devastated.

The UITs, while not as risky as the MLPs, nevertheless constantly underperformed the

market. The worst feature of the UITs, almost never explained to or understood by clients, is

that they carry a hefty cost to clients to purchase, as much as 4%, and they're liquidated after one

or two years. New UITs take their place for which the clients pay another 4% or so. These were

great investments for Eddie and Raymond James, but terrible ones for clients.

All this unauthorized trading, purchase of unsuitable securities, overconcentration of

client accounts, self-dealing, failure to put the clients' interests first - all of which violated

industry rules and standards and federal and state statutes - was done with the knowledge and

acquiescence of Raymond James management and compliance personnel. Thomas O'Brien, the

branch manager and Eddie's boss was aware of Eddie's malfeasance that continued for years, but

did nothing to stop him until it became so well known and so egregious that Eddie was fired.

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 All Claimants were clients of Eddie Lyons and Raymond James and all lost substantial

assets as the result of Eddie's malfeasance and Raymond James's complicity and failure to

properly supervise him.

They are seeking recovery of their losses and punitive damages, attorney fees, interest

and all their costs.

PARTIES

CLAIMANTS

NAMES OF 29 CLAIMANTS REDACTED

RESPONDENTS

23. Raymond James and Associates, Inc. (CRD # 705) is a broker-dealer registered with the

SEC and a member of FINRA. Raymond James is a successor of Morgan Keegan & Company,

LLC (CRD # 4161) which it acquired in 2012-2013.. Its headquarters is at 880 Carillon Parkway,

St. Petersburg, FL 33716. Raymond James assumed all liabilities of Morgan Keegan in its

acquisition. All references to Respondents shall collectively refer to Raymond James and the

former Morgan Keegan companies.

24. Thomas Whitmeyer O'Brien (CRD #2282208) has been a registered broker since 1992.

At most relevant times he was branch manager of the Raymond James office at 401 market St.;

Suite 1400; Shreveport, LA 71101 and was Eddie Lyons's direct supervisor.

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 OTHER RELATED CLAIMS

25. In May, 2016 an 88-year-old widow with Alzheimer's disease and a trust established for

her benefit2 filed a complaint in federal court against Raymond James & Associates, Inc. and

James Edward Lyons. The allegations of the complaint included detailed itemization of

unauthorized trading by Eddie Lyons, churning and purchases of unsuitable securities, primarily

in the oil and gas industry. The suit was settled in May 2017 for $400,000.

26. In September, 2017, Brenda Viselli, a former client, filed another complaint3 in federal

court against Raymond James, Eddie Lyons and Thomas O'Brien. Again, Plaintiff includes

itemization of unauthorized trading in unsuitable oil and gas securities. This case is pending

27. These prior cases, if the allegations are accurate, are similar if not identical to the

allegations of Claimants and thereby indicate a pattern of misconduct by Respondents that

displays a complete lack of supervision by Thomas O'Brien and Raymond James.

CAUSES OF ACTION

28. Violations of FINRA Rules.

Respondents violated numerous FINRA Rules, including, but not limited to, rules

regarding unauthorized trading, suitability, overconcentration and supervision. In addition,

Respondents violated FINRA Rule 2010 by failing to "observe high standards of commercial

honor and just and equitable principles of trade."

29. Violations of Industry Standards.

Respondents violated standards of the brokerage industry including, but not limited to,

engaging in self-dealing, failure to put the customer's interest first, failure to observe the rule

regarding "know your customer," failure to diversify customer portfolios, failure to inform

2
Montgomery et al. v. Raymond James et al. 5:16-cv-00738-SMH-MLH (Federal District Ct., W. Dist. La 2016)
3
Viselli v. Raymond James et al. 5:17-cv-01245-SMH-KLH (Federal Dist Ct., W Dist La. 2017)

5
customers of risks involved in securities being recommended or purchased and failure to inform

customers of inherent conflict of interest in their recommendations.

30. Breach of Contract.

When Claimants opened their accounts, whether with Morgan Keegan or Raymond

James, they and the firm entered into binding contracts. These contracts specifically or impliedly

required Respondents to handle Claimant accounts in a prudent manner consistent with industry

standards. Respondents did not do so, thereby breaching the contracts with Claimants. In

addition, each contract, like all contracts, contains a covenant of good faith and fair dealing.

Respondents breached this covenant by, among other actions, failure to abide by industry

standards, failure to obey FINRA Rules, failure to abide by federal and state laws, failure to

abide by common law principles and, generally, failure to handle Claimant accounts in an

honest, fair, competent and professional manner.

31. Breach of Federal Law.

In their dealing with Claimants and Claimant accounts, Respondents violated numerous

federal laws including provisions of the Securities Exchange Act.

32. Breach of State Law.

In their dealing with Claimants and Claimant accounts, Respondents violated numerous

Louisiana laws including provisions of Louisiana securities laws prohibiting unlawful practices,

Louisiana Revised Statutes 51:72.

33. Fraudulent and/or Negligent Representation

Respondents engaged in fraudulent representation, or in the alternative negligent

representation, by, among other actions, concealing the risks and costs inherent in purchases of

6
lower-tier oil and gas securities and in failure to explain to Claimants the costs inherent in the

purchases of unit investment trusts.

34. Fraudulent Concealment

Respondents fraudulently concealed from Claimants its egregious conflict of interest

when recommending or purchasing securities in oil and gas companies with whom Raymond

James had significant investment banking business. The interests of Raymond James in

maintaining its investment banking business with these companies, such as Linn Energy and

Memorial Partners, was a direct conflict with the financial interests of Claimants. Respondents

provided Claimants, in some cases, with research reports from these companies which reported

the investment banking relationship. Respondents had a duty, however, to explain the conflict

clearly to Claimants who owned or were contemplating purchasing the companies' securities.

Respondents are aware that retail customers such as Claimants rarely read such reports and, in

the rare cases when they do read them, do not understand or grasp the significance of the conflict

of interest. Respondents have a duty to point out that conflict clearly and to educate customers

as to the significance of the conflict. This Respondents did not do.

In addition, Respondents concealed from Claimants the possibility that in addition to

losing their entire investments in the partnerships they may also have to pay taxes over and

above their losses. In other words, Claimants were at risk of losing more than they actually

invested, and in some cases did lose more, because of the effects of CODI, Cancellation of Debt

Income that requires investors pay taxes on debt of the company that is discharged in bankruptcy

(or by some other means.) Had Respondents revealed the ramifications of CODI to investors,

many such investors would have not agreed to purchase the securities or would have sold them if

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they already owned them. Respondents were aware that revelation of the ramifications of CODI

would have made the securities less attractive and therefore fraudulently chose not to reveal it.

Also, on information and belief, Raymond James held internally millions of shares of

some of the companies for whom it was selling and recommending purchases of securities. On

information and belief, Raymond James owned upwards of 20% to 25% of the public "float" of

Linn Energy. It also owned a significant percentage of the public float of Memorial Partners.

Thus, it was in Raymond James's interest to prop up the prices of these securities for its own

benefit. It could do so by selling those securities to its clients or recommending clients hold the

securities rather than selling them. No purer conflict of interest could exist, and Raymond James

concealed this conflict from its clients, including Claimants.

DAMAGES

35. Claimants have suffered massive damages resulting from the misdeeds of Respondents as

set out herein. Claimants not only lost millions of dollars in portfolio value due to the

unauthorized and unsuitable investments but also incurred huge drains on their accounts from

commissions and fees collected by Respondents. In addition, Claimants suffered millions of

dollars that their accounts should have earned in the long-running bull market had they been

invested suitably. (For example, if Claimant REDACTED 'S portfolio had tracked the S&P

500 Index during the four years after Raymond James took over the from Morgan Keegan

[through June 2017], his account would have been worth $3.5 million. Instead, his account lost

value and was worth $2,018,000 - a net loss while the market was up 89%. This difference of

almost $1.5 million was directly attributable to mishandling of his account by Eddie and

Raymond James.)

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 Claimants therefore request the Panel to award them damages that include:

A Compensatory damages

B. Punitive Damages

C. Interest

D. Attorney fees

E. All costs

F. All forum fees.

Claimants believe that compensatory damages will exceed $5 million.

PANEL AND HEARING LOCATION

36. Claimants request a hearing before a panel of three arbitrators in Jackson, Mississippi.

Respectfully submitted this 3rd day of November, 2017.

_________________________________________
Frank "Kim" Breese, III
BREESE LAW OFFICE, PLLC
800 Woodlands Pkwy., Suite 103
Ridgeland, MS 39157
601-351-3339
Fax 601-487-6942
kim@breeselaw.com