CUSO hit with arbitration suit

Vernon Litigation Group filed an arbitration claim with the Financial Industry Regulatory Authority (FINRA) last month against CUSO Financial Services seeking damages of at least $500,000.

The Naples, Fla.-based legal firm said in a press release issued on Wednesday that its investor's rights attorneys are representing a credit union customer in Texas against a former financial advisor at CUSO Financial. Vernon Litigation’s claim against CUSO Financial includes allegations of breach of fiduciary duty and negligence and supervision lapses.

CUSO Financial, which was acquired by Atria Wealth Solutions in 2017, said it does not comment on pending litigation. Vernon Litigation could not be reached for comment.

According to BrokerCheck, that financial advisor, Eric Olin Shanks, worked with CUSO Financial from 2004 to 2014. He was fired by CUSO Financial for failing to “disclose surrender of a fixed annuity to fund a variable annuity purchase,” according to BrokerCheck.

Shanks is not currently registered as a broker.

Vernon Litigation alleged that the financial advisor engaged in a practice called “selling away,” which involves a financial professional soliciting a client to buy securities that are not offered by the brokerage firm itself. Such products may not have undergone due diligence, and the practice is a violation of FINRA rules.

In this case, Vernon Litigation alleges that their client – a retired teacher and widow in Texas – invested in a product called "Aurora.” This involved a third party, a former CUSO financial advisor named Conrad Bautista, who has been barred by FINRA from the securities industry.

According to a blog from Gana Weinstein, Bautista, who worked for CUSO Financial from January 2010 to March 2013, faced charges brought by FINRA involving a possible fraudulent investment scheme.