An arbitration panel for the Financial Industry Regulatory Authority has ordered a brokerage that’s already barred from the securities industry to cough up more than $1.6 million to plaintiffs who said the firm had sold and misrepresented nontraded real estate investment trusts.

According to the terms of the settlement, Worden Capital, a brokerage that Finra expelled from practicing in July 2022, and several of its former executives, must pay that award to Charles Smith and his Florala, Ala.-based firm Selrahc LP, which were listed as co-claimants.

Besides Worden Capital, former Worden executives Jamie John Worden, Gregory Patrick Bodkin and Richard Reiss Borgner were named in the complaint.

Worden and its former executives were accused of violating several securities regulations and laws when they invested the claimants’ portfolios in “unsuitable securities,” including unlisted, nontraded alternative assets such as REITs and other high-commission, high-fee illiquid investments that were “otherwise inappropriate,” between 2014 and 2015.

Smith and Selrahc requested $2.5 million for loss of income that they said would have been received if their portfolios had been managed properly, as well as for lost fees, management charges, commissions, and other costs associated with the action. The final settlement award, however, amounted to roughly $1.6 million.

In the hearing, the attorney for Smith and Selrahc also argued for sanctions against Worden and the other respondents for essentially lying to the panel when they provided false Morgan Stanley account statements. The panel agreed and awarded the claimants $1,000 for that alone.

In addition, Worden Capital must pay $1,404,593.02 in compensatory damages, $250,000 for fees and commissions paid, $9,207 for other costs, $625 for filing fees paid to Finra’s Dispute Resolution Services, and another $1,000 as a sanction for false statements plus attorneys’ fees.

Worden’s Bodkin, acting on his own, also made a motion to expunge the allegations from his record, which the panel agreed to. It had not been adequately demonstrated, the panel concluded, that Bodkin was involved in the alleged investment practice violations since he was not employed by Worden until 2017, two years after the transactions in question took place.