A Finra arbitration panel awarded 22 investors a $3 million arbitration award on Thursday against New York-based Spire Securities, its chief compliance officer and its CEO for failing to supervise a broker who orchestrated a Ponzi scheme.
Spire CEO David Blisk, however, criticized the award, asserting that the scheme was created by broker Patrick Churchville "two years after [the broker] left the firm.”
“We’re outraged by the result,” Blisk said. “We’re considering all our options and may file a motion to vacate the award. This broker is already in jail for this Ponzi scheme he created two years after he left Spire. We were never charged or even interviewed in the case the SEC brought against him.”
Meanwhile, Adam Gana, the securities attorney who represented the investors, said the victory “drives to the heart of firms’ responsibility to supervise its broker’s outside advice activities.”
“Blisk has no grounds to overturn this award. He should pay it. The broker was at Spire. They were responsible for supervising him and they failed to do so and an arbitration panel found they failed to do so,” said Gana, a managing partner for Gana Weinstein in New York.
“If they fail to pay the award we’re going to go after them for the full award to the full extent the law allows,” Gana said.
Churchville worked at Spire in Providence, R.I., from August 2009 to February 2011, according to his Finra record.
He launched his Ponzi scheme, which he operated through the advisory firm he founded, ClearPath Wealth Management, in December, 2010, according to a Securities and Exchange Commission complaint against the broker.
Spire was not named in the complaint the SEC filed against Churchville, his firm ClearPath and his multi-strategy funds in 2015.
Churchville was found guilty two years later and was sentenced to seven years in prison for operating a fraudulent scheme that defrauded investors out of at least $21 million.