Patricia Miller's Brokerage Firm Already Trying to Distance Itself from its Broker's Misconduct
Brokerage Firms Cannot Escape Responsibility to Supervise its Brokers by Claiming that the Brokers "are only Independent Contractors."
Meyer Wilson, along with the Pittsburgh firm of Rosen Louik & Perry, P.C., are currently representing a group of clients who are victims of broker Patricia Miller's alleged Ponzi scheme and we continue to receive calls from more victims. Based on what our investigation has uncovered, within days after Patricia Miller's affiliation was terminated earlier this month as a registered representative with Investor Capital Corp., the brokerage firm rushed to distance the firm from Ms. Miller's investment activities. Investors Capital was reportedly telling Ms. Miller's clients that they are not responsible for investor losses because Ms. Miller was never officially an employee of the brokerage firm but was only an "independent contractor registered representative" affiliated with Investors Capital.
In handling nearly 1,000 cases of investment fraud over the past fifteen years, we've seen this playbook by brokerage firms many times. As soon as a brokerage firm discovers that one of their brokers has been engaging in an investment fraud right under their noses, they often try to convince the clients that the firm has no duty to protect the broker's customers since the broker was never an "employee." They are flat wrong. In our experience, brokerage firms say those things so that the customers give up hope of recovering their money and never consult with an experienced securities arbitration attorney to learn what rights they have.
The rules and regulations of the securities industry make it clear that the independent contractor status for tax or other purposes has no bearing on a brokerage firm's obligations to supervise its registered representatives (ie., brokers). The regulators summed it up very clearly back in 1983: ""As far as the [regulators are] concerned, the 'Independent Contractor' category does not exist."
The securities regulators have addressed the supervision of independent contractors as follows:
Irrespective of an individual's location or compensation arrangements, all associated persons are considered to be employees of the firm with which they are registered for purposes of compliance with NASD rules governing the conduct of registered persons and the supervisory responsibilities of the member. The fact that an associated person conducts business at a separate location or is compensated as an independent contractor does not alter the obligations of the individual and the firm to comply fully with all applicable regulatory requirements. See, NASD Notice to Members 86-65, "Compliance with the NASD Rules of Fair Practice in the Employment and Supervision of Off-Site Personnel,"
Again in 1988, the regulators reminded brokerage firms:
[F]irms must supervise all of their associated persons - regardless of location, compensation or employment arrangement, or registration status -in accordance with the NASD By-Laws and Rules. The fact that an associated person conducts business at a separate location or is compensated as an independent contractor does not alter the obligations of the individual and the firm to comply fully with all applicable regulatory requirements.
If you were a client of former stockbroker Pat Miller and have questions about your legal rights, call attorney David Meyer toll-free at (888) 390-6491 for a complimentary case evaluation and for additional details about the ongoing investigation. You may also contact his co-counsel, Pittsburgh attorney Jon R. Perry with the law firm of Rosen Louik & Perry, P.C. at 412-281-4200.