BEAUMONT, TX (News Release) - By Donna McCollum - email
NACOGDOCHES, TX (KTRE) - Investor Jeff Badders is pleased Rosenthall Collins will pay back over $600,000 in commissions. It's a fraction of what investors lost in illegal deals handled by George Hudgins. The Nacogdoches attorney is getting more satisfaction knowing the huge Chicago firm must admit they weren't taking care of business.
"And to see the comments that were made in there about the wrongdoing and that Rosenthal Collins agreed with that and signed off on that was pretty amazing, really," Badders said.
The commission said Rosenthal Collins, ignored "red flags." Violations included a duty to "know their customer," such as Hudgins' background and investment objectives.
"Their actions were clearly illegal," Badders said.
Furthermore, the commission states RCG's employees failed to investigate and report activity that should have been recognized as suspicious.
"He showed a $7 million net worth and he lost over $35 million in 3 years," Badders said. "They said their people who are in charge of that did not know him. Did not maintain what they should have done."
All of this is ammunition for a civil lawsuit. Recently, a judge denied its certification for a class-action suit. In three weeks' time hundreds of plaintiffs have joined the original three plaintiffs.
"That knife cuts both ways because we have a lot more plaintiffs, but the defendants have a lot more plaintiffs to defend against," Badders said. "The best part of that ruling was the judge overruled their motion to dismiss. So the judges are saying our cases have merit and we're entitled to a trial."
Badders is working to regain losses. Other investors, many whom are elderly, have lost their life savings. Today original plaintiff, Barbara Carey said, "when you're 75 it's not easy to go out and replenish what has been stolen."
Depositions for the upcoming civil lawsuit are being scheduled. The actual trial is scheduled for next year. Cases like this one are often eventually settled out of court.