Houma retirees suing Raymond James brokers for $10 million over investment losses | Business News

June Butler, a retired librarian, said it isn’t just the loss of $125,000 from her retirement nest egg that troubles her. It’s also the sense that she and her family were betrayed by someone she considered a trusted confidant.

She’s one of 20 retirees from the Houma area suing national brokerage chain Raymond James Financial Inc. and two of its local brokers, Dixon Lewis and Colin Seibert, for allegedly putting them in wildly unsuitable investments without consulting them, and “churning” their accounts to generate high fees for the brokers at the expense of the clients’ savings.

Lewis was a long-time investment adviser to Butler, 86, and her husband, Joseph Butler, also a retired librarian until his death in 2019. Lewis had managed their money conservatively for most of the time, Butler said, until Raymond James acquired the firm where he and Seibert worked in 2013.

“My husband and I considered Dixon Lewis a friend, and we trusted him,” Butler said. “We had thought he was someone who would watch out for our interests.”

Shocking discovery

Yet Butler and other plaintiffs say they were shocked to find out that significant portions of their savings had been put into risky oil and gas investments, including real estate investment trusts and master limited partnerships related to companies that included Memorial Production Partners, Linn Energy Inc. and Linn Co.

“He knew this was not the type of investment that we would want,” Butler said. “In fact, Dixon Lewis had warned us against those kinds of investments. It seemed that when Dixon went into partnership with Colin Seibert something changed.”

Lewis would not comment on the allegations. He said he left the Houma affiliate of Raymond James before the plaintiffs filed their lawsuit last spring. Seibert, now Raymond James’ branch manager for Houma and Baton Rouge, deferred comment to Raymond James. The brokerage’s attorney says the plaintiffs were sophisticated investors who indeed signed agreements giving Seibert authority to put them in high-risk investments.

Robert and Shirley Gawlik, both retirees in their early 70s, had been introduced to Seibert by their son, whose wife was a friend of Seibert’s wife, a Houma native. The Seiberts moved to Houma from Texas after Raymond James acquired his previous employer.


The Gawliks say that although they told Seibert they wanted to protect the value of their savings and draw only modestly from it, he put their money in high-risk oil and gas-related investments without consultation. They assert that when they finally lost confidence in Seibert and moved their account to Hancock Whitney Corp. in 2020, the $1.4 million they originally invested at Raymond James was down to $726,000.

The suit seeks $10 million in damages, and is set to be arbitrated in July by a panel convened by the Financial Industry Regulatory Authority. Similar suits typically are handled by the authority, an industry self-regulatory organization, under the compulsory arbitration clauses that many people sign in broker contracts and which keep them from heading to regular courts where juries would decide.

There are about 4,000 such arbitration cases nationally each year and most — about 85% — are settled before they reach an arbitration hearing.

The financial services industry has for decades been successful in loosening government oversight and moving towards a lightly regulated, “buyer beware” philosophy.

The U.S. Securities and Exchange Commission, which oversees the Financial Industry Regulatory Authority, tightened its investor protection rules two years ago. But many gray areas remain in the industry’s so-called “best interest” rules, which are supposedly designed to ensure that advisers and brokers are prudent with clients’ money, said John Breyault, vice president of public policy at the National Consumers League.

Reading the ‘legalese’

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“This is an industry that has been dominated by sophisticated lobbyists [who] have successfully prevented meaningful consumer protection,” Breyault said. “What this means for investors … is that it is left up to them to read long ‘legalese’ disclosures that make them sitting ducks for an unscrupulous adviser.”

Raymond James’ attorney in New Orleans, Robert Dressel, said the plaintiffs in the lawsuit were indeed wealthy and sophisticated investors who had signed agreements giving Seibert authority to put them in “high risk” investments.

He said plaintiffs Whitney Guidry and Kent Bonvillain, for example, built up their own oil and gas business, Olympian Machine, which they sold for millions of dollars, and that they had accepted a high degree of risk when putting their money with Seibert to invest and had signed documents saying so.

Guidry said he never knowingly gave authority for Seibert to invest in obscure oil stocks such as Linn Energy’s master limited partnership.

“What first started to bother me were the large purchases in these companies, not even in major oil companies, but these small oilfield services companies,” he said. “To put that kind of money into those stocks without calling and asking … .”

The lawsuit says Guidry lost more than $1.2 million of his savings on the oil stocks investment Seibert put him into, and that Bonvillain lost $917,000.

“My monthly statement from Raymond James had over 400 pages with writing front and back,” Guidry said. “Unless you have eight hours to sit down and go through it line by line, it’s easy to miss investments like that.”

Checking for churn

Guidry and Bonvillain also assert that when they started scrutinizing their accounts, they noticed high fees for investments that required no management, such as money market accounts. Also, transactions such as selling shares then buying them back two days later at a higher price, which to them seemed designed simply to generate fees for the brokers.

“At a minimum, I was paying them $150,000 a year to take care of my money. You would think with management fees at that level, I would be taken care of,” Guidry said.

Raymond James spokesman Justin Mayfield said the firm had no comment on the lawsuit.

Houma residents survey widespread damage after Hurricane Ida struck the town on Aug. 29, 2021.

In early September, a few months after the lawsuit was filed and just a week after Hurricane Ida plowed through Houma, Raymond James’ in-house attorney, Michael Lamont, wrote a letter giving the plaintiffs who still had money in accounts 60 days to remove it.

“They essentially ‘fired’ my clients and left them scrambling to make other arrangements for their retirement accounts, just as they were still digging out from the hurricane,” said Jason Kane, attorney for the plaintiffs at Peiffer Wolf Carr Kane Conway & Wise. He said he suspects Raymond James sent the letter because the plaintiffs were suing the firm.

Though not necessarily an indication of how the Houma investors’ case will turn out, Raymond James faced a similar lawsuit involving Linn Energy and other oil investments in 2019. In that case, the the Financial Industry Regulatory Authority ordered Raymond James to pay $3.2 million to 29 investors. It also resulted in the Raymond James’ Shreveport-based broker, James Edward Lyons, being barred from the industry.

This story has been corrected to correct the first name of plaintiffs’ attorney.

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