SEC Action Against Private Equity Fund Onyx Capital Advisors May Expose Brokerage Firm to Significant Legal Claims
The SEC’s civil lawsuit filed on April 22, 2010 against Roy Dixon, Jr. and his allegedly fraudulent private equity fund Onyx Capital Advisors, LLC, serves to illustrate an important point about dealing with registered securities salespersons such as Mr. Dixon: their employing brokerage firms often are unable or unwilling to detect the alleged fraudulent conduct of their representatives. Mr. Dixon was employed by a licensed brokerage firm during the period of his alleged fraud, but that did not stop it from occurring. In fact, being a licensed representative of a licensed firm often gives a representative a “halo” or imprimatur of trust that can facilitate the fraud.
Brokerage firms like Mr. Dixon’s employer belong to FINRA, a self-regulatory organization and may have liability exposure. J. Steven Parker of Page Perry, LLC, a former state securities administrator, noted " FINRA has long established rules governing the 'outside business activities' of its employees, requiring the firms, among other things, to approve such activities and to establish procedures designed to detect and prevent unauthorized activities. In addition to these rules, there are a variety of common law principles that may and often do make the brokerage firm liable for the representative’s fraudulent activities."
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 35 occasions. Page Perry’s attorneys are actively involved in representing investors who have lost money in private equity investments. For further information, please contact us.
