FINRA Arbitration Panel Orders Arkadios Capital to Pay $2.7 Million in Ponzi Scheme-Related Claim
From the desk of Jim Eccleston at Eccleston Law
A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Arkadios Capital to pay $2.7 million in damages to an investor who alleged the firm failed to supervise a former registered representative whose father operated a long-running Ponzi scheme, according to InvestmentNews.
Although the claimant was not an Arkadios client, the arbitration panel found in her favor on claims that included breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, negligence, failure to supervise, and selling away. As InvestmentNews reports, the arbitration award does not specifically reference the Ponzi scheme, but the fraudulent investment formed the basis of the dispute.
The matter centers on former Arkadios representative Michael Lickiss, who worked for the firm from late 2021 through the summer of 2024 in Danville, California. According to InvestmentNews, Michael Lickiss's father, Edwin Lickiss, pleaded guilty in federal court in May to one count of wire fraud and one count of money laundering for operating a Ponzi scheme that spanned decades.
Edwin Lickiss worked in the securities industry for 36 years before FINRA suspended him in 2014 for failing to disclose federal and state tax liens on his regulatory records. He never registered with Arkadios Capital.
According to InvestmentNews, counsel for the Claimant attributed the arbitration award to Arkadios' alleged supervisory failures further stating that Edwin Lickiss shared office space with his son and used a Medallion Guarantee stamp on client documents while operating the fraudulent scheme.
Arkadios disputes the arbitration award and plans to file a motion in federal court seeking to vacate the decision. InvestmentNews reports that the firm's chief legal and corporate strategy officer stated that the claimant never maintained an account with Arkadios and that Edwin Lickiss never worked for or associated with the firm. The firm also stated that it did not know Edwin Lickiss maintained an office at the location and asserted that he used the Medallion Guarantee stamp without the firm's knowledge.
Federal prosecutors alleged that Edwin Lickiss operated the Ponzi scheme from 1998 through September 2024. According to the Department of Justice, he admitted defrauding more than 93 investors of at least $9.5 million by falsely claiming he would invest client funds in exclusive, safe, tax-free bonds that generated returns exceeding 20 percent. The Department of Justice also alleged that he issued fraudulent promissory notes, used money from newer investors to pay earlier investors, and diverted investor funds for personal expenses, including home renovations, travel, vehicles, mortgages, and credit card payments.
Edwin Lickiss has pleaded guilty but has not yet been sentenced, according to InvestmentNews.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra arbitration, arkadios capital, ponzi scheme, failure to supervise, securities fraud
