FINRA RULES AGAINST SPENCER INTERNATIONAL ADVISORS, INC. AND SCOTT A. SPENCER
In a unique case of breach of fiduciary duty, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded $205,529.98 to a 75 year old, Pinellas Park widow.
The claimant, Shirley Jeup had been a customer of Spencer International Advisors, Inc, a Clearwater investment advisory company since 1998. When Mrs. Jeup wanted to help her children build the Waterin’ Trough country western bar on 66th Street North in Pinellas Park, Scott Spencer, President of Spencer International, advised 13 of his elderly customers to purchase 15% notes to raise the money. Jeup agreed to guarantee these notes.
By November 2007, when the notes were to come due, the failing economy made it very difficult to find substitute financing. Spencer agreed to act as agent for the note holders and pressured Jeup to pay a 2% note extension fee and transfer virtually all of her IRA savings to an account for the benefit of the note holders. He also had Mrs. Jeup sign an agreement not to encumber on the Waterin’ Trough property.
By March 2009, when the notes were still not paid, and even though Mrs. Jeup was close to securing replacement financing from Regions Bank, Spencer sued Mrs. Jeup as agent for the note holders. The filing of this suit was reported in the St. Petersburg Times on March 20, 2008.
“The suit was filed by Mr. Spencer as the note holder’s agent against Mrs. Jeup, even though he continued to act as Mrs. Jeup investment advisor and certified financial planner,” said Mr. Eric Ludin, Mrs. Jeup’s attorney.
Ludin added that, “Mr. Spencer was Mrs. Jeup’s fiduciary and held a position of trust. Therefore, he could not represent the interest of his note holders against Mrs. Jeup because he had a clear duty to all parties and had a conflict of interest.”
Just before the Waterin’ Trough notes went into default, the St. Petersburg Times reported about other notes in default owned by Spencer’s elderly clients. The other notes benefited a condo development owned by developer John Loder. After the default on these notes was reported in the media, Charles Schwab discontinued acting as the broker/dealer for Spencer.
It is believed by Mrs. Jeup that the failure of the Loder notes and Schwab’s decision to terminate its broker/dealer relationship put added pressure on Spencer to act aggressively against Mrs. Jeup, his client.
Mr. Spencer earned over $60,000 by recommending the Waterin’ Trough notes to his customers. Mrs. Jeup lost over $200,000 from her IRAs.
Eric E. Ludin, of the law firm of Tucker & Ludin, P.A. has represented investors against broker/dealers and registered investment advisors since 1990 in cases involving fraud, breach of fiduciary duty, and account mismanagement.
About Me
- Eric E. Ludin
- Clearwater and Tampa, Florida, United States
- Eric E. Ludin received his Bachelor of Arts degree from Michigan State University in 1979, with honors. He received his JD from the University of Pittsburgh School of Law in 1982. Mr. Ludin's practice concentrates on immigration law, securities litigation, general and commercial litigation, commercial landlord/tenant conflicts and personal injury litigation. Mr. Ludin was President of the St. Petersburg Bar Association from 2000 - 2001. He served as President of the St. Petersburg Bar Foundation from 2004 - 2006. Mr. Ludin recently completed a term as the chair of the 6th Judicial Circuit Grievance Committee “E” of the Florida Bar. Mr. Ludin is chairman of Menorah Manor, a not for profit nursing, assisted living and rehabilitation center. He is President of the Tampa Bay Leadership Counsel of the Crohn's and Colitis Foundation and President of the CASA Foundation (Community Action Stops Abuse). He is a member of AILA, the American Immigration Lawyers Association and is committed to assisting people realize their dream of living in the United States. Mr. Ludin has an "AV" rating with Martindale-Hubbell which is the highest peer rating an attorney can be awarded.