Stoltmann Law Offices is a Chicago-based investor rights law firm offering representation to defrauded investors on a contingency fee basis. On February 24, 2022, the United States Securities and Exchange Commission (SEC) filed a civil complaint against Arthur Stewart Hoffman alleging he breached his fiduciary duty to several clients he recommended invest in an entity called Zima Global Ventures. The SEC alleges that Zima Global was to pool investor money to then invest in a crypto-currency trading operation. Investors who put their hard-earned money into Zima as a result of the recommendation by Hoffman may have viable claims for recovery against Ameriprise Financial, the brokerage and investment advisory firm Hoffman was registered with at the time he made these solicitations.
According to his FINRA BrokerCheck Report, Hoffman was registered with Ameriprise from November 2016 until his termination for cause on May 13, 2020. Two days after he was terminated, FINRA barred Mr. Hoffman from the securities industry for failing to cooperate and provide documents and information in response to a Rule 8210 request for information. Mr. Hoffman also filed for Chapter 7 bankruptcy protection in Arizona in May 2020. Importantly, on February 16, 2016, a customer filed a complaint against Hoffman which alleged a million dollars in damages in connection with securities fraud, breach of fiduciary duty, and fraudulent concealment. The regulator reports that this case was settled for $329,500, making it a very meaningful customer claim and supervisory issue for Hoffman moving forward. Ameriprise should have kept Hoffman on a very short leash, but the facts seem to be, they allowed him to operate on a proverbial island where he was able to run an outside business and funnel Ameriprise client money to this Zima crypto-scam.
Brokerage firms like Ameriprise are legally responsible for supervising their financial advisors. Included in this mandate is to adequately supervise outside businesses, even if they are not disclosed, if red flags exist that the advisor is operating an outside entity. Here, Ameriprise clients invested money in Zima based on Hoffman’s solicitations. Red flags do not get much more serious than that. Simply phone calls and monitoring of client accounts would have revealed that Hoffman was selling securities in an outside entity. Ameriprise’s supervisory procedures were insufficient and not up to industry standards, which could make Ameriprise liable for negligence.
Likewise, because Hoffman was a registered representative of Ameriprise at all times relevant, Ameriprise can also be liable to
Zima investors based on apparent agency. This means that Ameriprise can be legally responsible for Hoffman’s misconduct because in the eyes of the investors, Hoffman was providing investment advice, which is what his role with Ameriprise was intended for. These legal issues are critical and can provide victims of this fraud a way to recover their money in a situation where there do not appear to be any other legitimate sources of recovery.
If you were sold interests in Zima Global by Arthur Hoffman, please contact Stoltmann Law Offices, P.C. at 312-332-4200, for a free-no obligation consultation with a securities attorney. We are a contingency fee law firm which means we do not get paid until you do!
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