Thomas Redmond, Jr., an Indianapolis-based securities broker formerly registered with the Financial Industry Regulatory Authority (FINRA), was sentenced to four years in prison earlier this year for securities fraud. Redmond was registered with Next Financial Group, Inc., from 2007 to 2009. Prior to that, he was registered with Capital Financial Services, Inc., in Carmel, Indiana.
According to the Indiana Secretary of State, Redmond began taking his clients’ funds for personal use as early as 2004, defrauding approximately 10 clients of a total of $580,000. Indiana’s Secretary of State recently announced that $46,000 would be returned to five investors who worked with Redmond and lost their life savings in his Ponzi scheme.
In addition to running a Ponzi scheme, it appears that Redmond defrauded other investors through his brokerage business with Next Financial. In 2011, FINRA initiated a regulatory action alleging against Redmond claiming that he defrauded customers through the sale of high risk investments that had been approved by Next Financial.
Specifically, FINRA alleged that between 2007 and 2008, Redmond made “unsuitable investment recommendations” to a 60-year-old widow. Redmond apparently knew the widow had little investment experience, and told her to invest almost half of her funds in high risk investments without informing her of the risks. It also appears that Redmond forged the signatures of two clients on subscription agreements for Provident Royalties, LLC., without their knowledge or consent.
Brokerage firms are required to enforce supervisory systems reasonably calculated to ensure that their brokers are acting in compliance with all applicable rules and regulations. It appears that Next Financial failed in this respect. It is possible that Redmond’s customers may be able to recover their losses by pursuing claims against Next Financial for their supervisory failures through arbitration at FINRA Dispute Resolution.
Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership, and shareholder rights disputes. Investors who worked with Redmond are encouraged to contact our law firm at 312-443-1600 to discuss their legal rights.