Case 5:16-cv-00738-SMH-MLH Document 1 Filed 05/26/16 Page 1 of 25 PageID #: 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

ANNE B. MONTGOMERY AND JERRY CIVIL ACTION NO. ______________

K. MONTGOMERY, AS TRUSTEE OF
THE FRAZIER J. MONTGOMERY AND
ANNE B. MONTGOMERY
IRREVOCABLE TRUST

VERSUS JUDGE

RAYMOND JAMES & ASSOCIATES, MAGISTRATE JUDGE

INC. AND JAMES EDWARD LYONS

COMPLAINT

NOW INTO COURT, through undersigned counsel, come Plaintiffs, ANNE B.

MONTGOMERY (Mrs. Montgomery), through her duly authorized agent, JERRY K.

MONTGOMERY, and JERRY K. MONTGOMERY, in his capacity as Trustee (hereinafter

sometimes referred to as Trustee or Jerry Montgomery), who file this Complaint and

allege the following against RAYMOND JAMES & ASSOCIATES, INC. (Raymond

James) and JAMES EDWARD LYONS (Lyons) (sometimes collectively Defendants):

I.
PLAINTIFFS

1.
Mrs. Montgomery brings this action through her agent-in-fact and son, Jerry K.

Montgomery.

2.
Specifically, Jerry Montgomery is the authorized agent of Mrs. Montgomery pursuant to

a Power of Attorney executed by Mrs. Montgomery on or about September 21, 2005, a copy of

which is attached as Exhibit 1 to this Complaint and incorporated herein by reference. That

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Power of Attorney specifically authorizes Jerry Montgomery to file suit on behalf of his mother,

Mrs. Montgomery. Exhibit 1, p. 3, 12.

3.

Mrs. Montgomery, as the principal, is considered a named plaintiff.

4.
Mrs. Montgomery, a widow, is eighty-eight (88) years old and suffers from Alzheimers

disease.

5.
Jerry Montgomery is the Trustee of the Frazier J. Montgomery and Anne B.

Montgomery Irrevocable Trust (the Trust) and, in that capacity brings this action on behalf

of the Trust.

6.
The Trust was established by a trust instrument dated September 29, 1997 (the Trust

Agreement), which is incorporated herein by reference. Frazier J. Montgomery, Mrs.

Montgomerys late husband, was the settlor of the Trust. Mrs. Montgomery was and has always

been the income beneficiary of the Trust. Mrs. Montgomery was also a former trustee of the

Trust. A copy of the Trust Agreement is attached to this Complaint as Exhibit 2 and

incorporated into this Complaint by reference.

7.
Section 10.2 of the Trust Agreement grants certain powers to a committee that initially

consisted of Frazier J. Montgomery, Mrs. Montgomery and Jerry Montgomery.

8.
Following the death of Frazier J. Montgomery on February 25, 2000, and pursuant to an

Act of Appointment of Successor Trust Committee Members dated September 28, 2006, which

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is incorporated herein by reference, Mrs. Montgomery and Jerry Montgomery appointed J. Peter

Gaffney and Minnett Thornton as successor members of the Trust Committee.

9.
J. Peter Gaffney died on April 24, 2014, leaving Mrs. Montgomery, Jerry Montgomery

and Minette Thornton as members of the Trust Committee.

10.
Subsequently, Mrs. Montgomerys health declined and, as a result, she ceased to serve as

a member of the Trust Committee.

11.
Section 10.1 of the Trust Agreement provides that if the Trustee shall resign or cease to

act as Trustee for any reason, the successor Trustee shall be appointed by the Trust Committee.

Furthermore, Section 10.3 of the Trust Agreement provides that one or more individuals may be

appointed as successor Trustee(s) by a majority vote of the members of the Trust Committee.

12.
On or about February 11, 2016, Minnett Thornton resigned as a member of the Trust

Committee.

13.
On or about February 12, 2016, Jerry Montgomery (as agent for Mrs. Montgomery and in

his capacity as a member of the Trust Committee) executed an Appointment of Successor

Trustee by Written Consent of the Trust Committee of the Frazier J. Montgomery and Anne B.

Montgomery Irrevocable Trust, a copy of which is attached to this Complaint as Exhibit 3 and

incorporated into this Complaint by reference. The 2016 Appointment of Successor Trustee by

Written Consent of the Trust Committee of the Frazier J. Montgomery and Anne B. Montgomery

Irrevocable Trust named Jerry Montgomery as Trustee of the Trust.

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14.
Both Jerry Montgomery and Mrs. Montgomery are majors and domiciliaries of

Shreveport, Caddo Parish, Louisiana.

II.
DEFENDANTS

15.
Defendants are:

a. Raymond James, a Florida corporation with its principal place of business in St.

Petersburg, Florida. Raymond James may be served with process through its

registered agent for service of process in Louisiana, CT Corporation System; and

b. James Edward Lyons, a major and domiciliary of Shreveport, Caddo Parish,

Louisiana. Lyons was employed by Raymond James at the particular and relevant

times described herein.

III.
JURISDICTION & VENUE

16.
This Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. 1331

because Plaintiffs have claims against Defendants that arise under federal law. Furthermore, this

Court has supplemental jurisdiction pursuant to 28 U.S.C. 1367(a) over Plaintiffs state law

claims against Defendants.

17.
Venue is proper in the Western District of Louisiana under 28 U.S.C. 1391(b)(2)

because a substantial portion of the events and omissions giving rise to Plaintiffs claims

occurred in this district.

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IV.
FACTS

A. The Establishment Of The Accounts

18.
In or about 2002, Mrs. Montgomery contacted John Blocker Thornton, III (Blocker

Thornton), husband of Minnett Thornton, regarding her desire to invest money.

19.

At that time, Blocker Thornton and Lyons were employed as investment advisors with

Morgan Keegan & Company, Inc. (Morgan Keegan). Further, Blocker Thornton and Lyons

were partners and/or manager of Morgan Keegans Lyons/Thornton branch in Shreveport,

Louisiana. Minnett Thornton served as an administrative assistant to Blocker Thornton and

Lyons at that time.

20.

Based on her age (72) at the time, Mrs. Montgomerys primary investment objectives

were to preserve principal and earn interest by having her funds and the Trusts funds invested in

safe and secure investments. Mrs. Montgomery wanted to continue to maintain her current

standard of living and to provide some support for members of her family. Mrs. Montgomery

made it clear to Blocker Thornton and Minnett Thornton that she had an aversion to risk and

desired safe and secure investments.

21.

Mrs. Montgomery clearly and unequivocally communicated her investment objectives to

Morgan Keegan, Blocker Thornton, and Minnett Thornton on numerous occasions, as evidenced,

in part, by the manner in which Blocker Thornton invested the assets in Plaintiffs accounts with

Morgan Keegan prior to his death in 2011.

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22.

Mrs. Montgomery also made it clear that she did not have significant experience in

investing in securities.

23.

Therefore, Mrs. Montgomery trusted Morgan Keegan, Blocker Thornton and Minette

Thornton to manage her assets and the Trusts assets with the utmost skill and care and to make

investment recommendations to her based on her investment objectives.

24.

Accordingly, in or about 2002, Mrs. Montgomery deposited approximately sixty

thousand dollars ($60,000.00) of her personal funds and over one million dollars ($1,000,000.00)

of Trust funds into two separate accounts with Morgan Keegan, namely a personal account in her

name (the Personal Account) and an account in the name of the Trust (the Trust Account),

both of which are sometimes collectively referred to as the Accounts. Mrs. Montgomery

subsequently deposited additional sums into the Accounts.

25.

Mrs. Montgomery explained to Morgan Keegan, Blocker Thornton and Minnett Thornton

that the funds being invested encompassed a substantial portion of her life savings.

26.

Subsequently, and until the death of Blocker Thornton on February 17, 2011, Morgan

Keegan, through Blocker Thornton, consistent with Mrs. Montgomerys investment objectives

and prudent investment practices, invested funds in the Accounts primarily in government bonds

and related securities and other safe investments.

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B. Lyons Takes Control Of The Accounts

27.

Following the death of Blocker Thornton, when Mrs. Montgomery was then over 80

years old, Lyons took control of the Accounts. Unfortunately, and to Mrs. Montgomerys severe

detriment, Lyons, in blatant disregard of Mrs. Montgomerys investment objectives and prudent

investment practices, significantly increased Mrs. Montgomerys positions in equities.

Specifically, Lyons placed a majority of the funds in the Accounts in energy and energy-related

stocks such as Marathon Oil Corporation and Kinder Morgan, Inc.

28.

Upon information and belief, Lyons did not consult Mrs. Montgomery prior to

purchasing those equities and, thus, did not obtain her consent to execute those trades. At all

pertinent times, Lyons exercised complete control over the Accounts as if they were

discretionary accounts, which they were not, and utterly disregarded his duties to Mrs.

Montgomery, who, by the time Lyons took over the Accounts, was an elderly widow.

29.

Until 2012, Morgan Keegan, as the employer of Lyons, was a controlling party under 15

U.S.C. 78(t)(a) and any other applicable law.

30.

In addition to other unpredictable factors, the oil and gas industry is dependent upon

world markets, which are inherently unstable and volatile. As such, Lyons investments of the

funds in the Accounts in speculative energy and energy-related equities were directly contrary to

Mrs. Montgomerys investment objectives and unsuitable for an elderly widow.

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31.

Nevertheless, Lyons continued to engage in careless, reckless and excessive unauthorized

trading in the Accounts by increasing the positions of energy and energy-related equities in the

Accounts.

32.

In or about 2012, Raymond James and Morgan Keegan entered into a transaction that

resulted in Raymond James becoming the successor to Morgan Keegan. By end of year 2012, the

Accounts were transferred to Raymond James in connection with that transaction. At all

pertinent times, Raymond James was a controlling party under 15 U.S.C. 78(t)(a) and any other

applicable law.

33.

However, neither Mrs. Montgomery, nor anyone on her behalf, has ever signed any type

of account agreement with Raymond James, with respect to either of the Accounts. That was

confirmed to Jerry Montgomery by (a) the manager of the Raymond James office in Shreveport,

Louisiana, where Lyons works, and (b) the records that the Plaintiffs have received from

Raymond James. Furthermore, there is no assignment provision in the Plaintiffs prior account

agreements with Morgan Keegan that provide that they may be assigned to any successor of

Morgan Keegan by merger, consolidation or otherwise.

34.

Throughout the course of Mrs. Montgomerys relationship with Raymond James, Lyons

continued to engage in careless, reckless, excessive and unauthorized trading in the Accounts in

blatant disregard of Mrs. Montgomerys investment objectives and contrary to any elderly

widow, and Raymond James failed to monitor or supervise the actions of Lyons.

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35.

According to the Raymond James records of the Accounts in Plaintiffs possession, both

Mrs. Montgomery and the Trust consistently maintained that their investment objectives were

growth and income, both of which are described as carrying medium risk tolerances with a

time horizon less than 5 years. However, none of the records for the Accounts in Plaintiffs

possession include an account agreement for either of the Accounts with Raymond James.

36.

By December 31, 2012, when Mrs. Montgomery was 82 years old and 10 years after the

date that Mrs. Montgomery first entrusted her life savings to Morgan Keegan and approximately

2 years after Lyons assumed control over the Accounts, Lyons had invested approximately

38.99% of the funds in the Trust Account in equities. Not only was that percent of equities

completely at odds with Mrs. Montgomerys stated investment objectives, which never changed,

it was completely inappropriate for an elderly (80-year-old) widow with a substantial portion of

her life savings represented by the Accounts.

37.

Lyons careless, reckless, excessive and unauthorized trading continued and, in fact, got

progressively worse, and Raymond James continued to fail to monitor or supervise Lyons

egregious actions. Through December 31, 2013, Lyons had invested 49.66% of the funds in the

Trust Account in equities. By December 31, 2013, Lyons had invested 37.43% of the funds in

the Personal Account in equities. Incredibly, as Mrs. Montgomery aged, Lyons increased the

equity positions in the Accounts.

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38.

Lyons careless, reckless, excessive and unauthorized trading continued in the Accounts

through 2014. By December 31, 2014, Lyons had invested 56.22% of the funds in the Trust

Account in equities. By that same date, Lyons had invested 54.55% of the funds in the Personal

Account in equities. Notwithstanding Lyons egregious conduct, Raymond James continued to

fail to monitor or supervise the actions of Lyons.

39.

As difficult as it is to fathom, Lyons careless, reckless, excessive and unauthorized

trading in the Accounts continued through 2015, and Raymond James, inexplicably, continued to

fail to monitor or supervise Lyons actions. By December 31, 2015, Lyons had invested 73.91%

of the funds in the Trust Account in equities. By that same time, he had invested 55.05% of the

funds in the Personal Account in equities. At that time, Mrs. Montgomery was 88 years old.

40.

As of January 29, 2016, Lyons had invested 71.66% of the funds in the Trust Account

and 67.14% of the funds in the Personal Account in equities.

41.

Upon information and belief, Lyons executed careless, reckless, excessive and

unauthorized trades in both Accounts that significantly increased the risk of the Accounts

without advising or consulting with Mrs. Montgomery. It is clear that Lyons executed the trades

without regard to what was in the best interest of Mrs. Montgomery and in blatant disregard of

her investment objectives. At all pertinent times, Lyons traded in both Accounts as though they

were discretionary and in blatant disregard of his responsibilities to an elderly widow.

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42.

Substantial portions of the equities in the Trust Account and the Personal Account were

in energy and energy-related stocks and other positions, which were at odds with Mrs.

Montgomerys investment objectives and any elderly widow. Regardless of Mrs. Montgomerys

investment objectives, even a marginally responsible broker would not have invested the funds in

the Accounts of an elderly widow in the manner in which Lyons did.

43.

Lyons and Raymond James knew, or in the exercise of even the lowest standard of

reasonable care, should have known, that their placing significant portions of the funds in the

Accounts in equities were anathema to Mrs. Montgomerys investment objectives and to what

was in the best interests of an elderly widow.

44.

Furthermore, and upon information and belief, Lyons and Raymond James executed

most, if not all, of the careless, reckless and excessive trades in the Accounts without Mrs.

Montgomerys consent or informing her of the risks associated with the trades. Lyons did not

have any authority whatsoever, either express or implied, to execute trades in the Accounts

without Mrs. Montgomerys consent.

45.

On or about December 3, 2014, Lyons and Raymond James were provided a copy of Mrs.

Montgomerys Power of Attorney, naming Jerry Montgomery as agent-in-fact with authority to

make investment decisions on her behalf. Notwithstanding that fact, Lyons and Raymond James

continued to execute careless, reckless and excessive trades in the Accounts without seeking the

consent of Jerry Montgomery or Mrs. Montgomery and without informing either one of them of

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the heightened risks associated with the trades. Again, notwithstanding that Lyons did not have

any authority whatsoever, express or implied, to execute trades in the Accounts without Jerry

Montgomerys or Mrs. Montgomerys consent, he acted as if the Accounts were discretionary.

46.

Despite Mrs. Montgomerys failing health, deteriorating mental condition and her

increasing age, neither Lyons nor Raymond James contacted Jerry Montgomery about the

careless, reckless and excessive trades in the Accounts. Lyons managed the Accounts as if he

had unfettered discretion to do whatever he wanted to do, without any regard to what was in Mrs.

Montgomerys best interest, her investment objectives or prudent investment practices, and

Raymond James utterly and completely failed to monitor or supervise the actions of Lyons.

47.

In fact, even after being provided a copy of Jerry Montgomerys Power of Attorney from

Mrs. Montgomery, Lyons executed approximately $446,000.00 in purchases and $394,000.00 in

sales in the Personal Account in 2015, without Mrs. Montgomerys or Jerry Montgomerys

consent. In January 2016 alone, Lyons executed approximately $207,000.00 in purchases and

$185,000.00 in sales in the Personal Account without Mrs. Montgomerys or Jerry

Montgomerys consent.

48.

However, on or about January 20, 2016, Lyons finally attempted to seek permission to

sell the Accounts oil and gas equities from Rebecca Hogan, an employee of Resource Louisiana.

However, Mrs. Hogan had no authority whatsoever to act for Mrs. Montgomery or the Trust.

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49.

In addition to acquiring and maintaining investments unsuitable for Mrs. Montgomery,

Lyons and Raymond James also failed to take necessary steps to preserve Mrs. Montgomerys

principal investment and, in fact, the egregious actions (on the part of Lyons) and the gross

negligence (on the part of Raymond James) substantially reduced the value of the principal

amount of the assets in the Accounts.

50.

The value of the Trust Account declined by approximately $38,000.00 in 2013,

$140,000.00 in 2014, $305,000.00 in 2015 and $120,000.00 in January 2016 (a $120,000.00

decline in one month), and a cumulative decline amount of $603,000.00 from 2013 through

January 2016.

51.

The value of the Personal Account declined by approximately $13,000.00 in 2013,

$80,000.00 in 2014, $288,000.00 in 2015, and $228,000.00 in January of 2016 (a $228,000.00

decline in one month, for a combined decline in both Accounts in the amount of $348,000.00 in

one month), and cumulative decline amount of $609,000.00 from 2013 through January, 2016.

52.

In other words, as a result of the egregious conduct of Lyons and the gross negligence of

Raymond James, the Accounts declined in value by $1.2 million.

53.

Upon information and belief, most of the decline in the Accounts was attributable to a

severe decline in the value of the speculative energy stocks.

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54.

Rather than liquidating or, at the very least, minimizing the positions in those equities in

the Trust Account, Lyons consistently increased the investments in energy and energy-related

stocks and other equities in the Accounts through January, 2016. Lyons egregious actions only

compounded the decline in the value of the Accounts. Again, Raymond James failed to monitor

or supervise Lyons actions.

55.

On or about January 20, 2016, Rebecca Hogan informed Jerry Montgomery that Lyons

had contacted her about the Accounts. At that point, Jerry Montgomery contacted Lyons and

instructed him, in no uncertain terms, to cease all trading activity in the Accounts and, in

particular, trading in energy and energy-related securities.

56.

Upon information and belief, and consistent with his prior course of conduct, Lyons

disregarded that instruction and continued his practice of executing unauthorized trades in both

Accounts in blatant disregard of his responsibilities to an elderly widow.

57.

In addition to executing unauthorized trades in investments which were inappropriate for

an elderly widow and contrary to Mrs. Montgomerys stated investment objectives, Lyons

engaged in excess trading in the Accounts as if they were discretionary and for the sole benefit of

Defendants.

58.

In 2013, Lyons executed approximately $322,000.00 in purchases in the Personal

Account. In 2014, Lyons executed approximately $712,000.00 in purchases and $209,489.35 in

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sales in the Personal Account. In 2015, Lyons executed approximately $446,000.00 in purchases

and approximately $394,000.00 in sales in the Personal Account. In January 2016 alone, Lyons

executed approximately $207,000.00 in purchases and approximately $185,000.00 in sales in the

Personal Account. At all pertinent times, Raymond James failed to monitor or supervise Lyons

excessive trading in the Personal Account.

59.

In 2013, Lyons executed approximately $159,000.00 in purchases and $155,000.00 in

sales in the Trust Account. In 2014, Lyons executed over $1,100,000.00 in purchases and

approximately $898,000.00 in sales in the Trust Account. In 2015, Lyons executed

approximately $705,000.00 in purchases and approximately $679,000.00 in sales in the Trust

Account. In January 2016 alone, Lyons executed approximately $116,000.00 in purchases and

$109,000.00 in sales in the Trust Account. At all pertinent times, Raymond James failed to

monitor or supervise Lyons excessive trading in the Trust Account.

60.

Upon information and belief, Lyons engaged in excessive trading in order to generate

commissions and/or other financial incentives for himself and/or Raymond James, and Raymond

James continuously failed to monitor or supervise Lyons actions.

61.

Ultimately, in February 2016, Jerry Montgomery, acting as agent for his elderly mother

and as Trustee of the Trust, terminated Mrs. Montgomerys relationship with Lyons and

Raymond James and moved the Accounts to another brokerage firm.

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62.

Thereafter, Jerry Montgomery liquidated many equities in the Personal Account and the

Trust Account. In doing so, Mrs. Montgomery and the Trust suffered substantial monetary

losses, all of which resulted from (a) Lyons careless, reckless and excessive trading in the

Accounts without consent, and (b) the abysmal failure of Raymond James to monitor or

supervise Lyons.

V.
COUNT I: BREACH OF DUTIES

63.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them in

their entirety into this Count.

64.
At all times material hereto, Defendants were brokers or broker-dealers, and/or associated

with brokers or broker-dealers, within the meaning of the securities laws of the United States and

the State of Louisiana and, therefore, Defendants owed duties to Mrs. Montgomery and the

trustees of the Trust, including without limitation:

a. the duty to recommend a stock only after studying it sufficiently to become informed as

to its nature, price and financial prognosis;

b. the duty to carry out the customers orders promptly in a manner best suited the

customers interest;

c. the duty to inform the customer of the risks involved in purchasing or selling a particular

security;

d. the duty to refrain from self-dealing;

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e. the duty to disclose any personal interest the broker may have in a particular

recommended security;

f. the duty not to misrepresent any fact material to the transaction;

g. the duty to transact business only after receiving prior authorization from the customer;

and

h. any and all other duties.

65.
Mrs. Montgomery, individually and while she was trustee, and Jerry Montgomery, as

Trustee, trusted and relied upon Defendants in the management of her life savings.

66.
Mrs. Montgomery, an elderly widow, entrusted substantial sums of money to the

Defendants on the advice and recommendation of Defendants, and paid the Defendants

substantial fees to manage and monitor the funds in the Accounts with reasonable care,

competence, and diligence.

67.
Defendants duties to Mrs. Montgomery, individually and as a trustee of the Trust,

required them to act at all times in good faith and with fair dealing toward Mrs. Montgomery,

individually and as trustee of the Trust.

68.
Defendants violated their duties to Mrs. Montgomery, individually and as trustee, and

Jerry Montgomery as Trustee, by placing their own financial interests ahead of those of Mrs.

Montgomery and the Trust. That is evidenced by Defendants failure to advise Mrs.

Montgomery and Jerry Montgomery of the true risk inherent in the trades executed in the

Accounts, the fact that those trades were unsuitable to Mrs. Montgomerys circumstances and

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goals, the fact that the trades were designed to benefit the Defendants at the expense of Mrs.

Montgomery and the Trust, and that Defendants actions or inactions were the only reasons why

her Accounts substantially declined in value from 2013 through January 2016.

69.
Furthermore, it was inappropriate for Minnett Thornton, an employee of Raymond James

and Lyons personal assistant, to serve as a member of the Trust Committee of the Trust. Under

no circumstances should Raymond James have allowed Minette Thornton to serve as a member

of the Trust Committee. Instead of placing the Trusts interests above her own, as she was

required to do, she encouraged Mrs. Montgomery to do business with her employer, Raymond

James, which failed to monitor or supervise Lyons actions. This created an irreconcilable

conflict of interest for Raymond James, and that irreconcilable conflict of interest contributed to

the substantial losses in the Trust Account while Raymond James profited through the careless,

reckless, excessive, unauthorized and unsupervised trading engaged in by Lyons.

70.
Consequently, Mrs. Montgomery, individually and as trustee, suffered losses which

include, but are not limited to, loss of past, present and future investment principal; loss of past,

present and future interest on investment principal; loss of opportunity for reasonable return on

investments, and other losses and damages for which Defendants are liable.

VI.
COUNT II: CHURNING
VIOLATION UNDER THE FEDERAL SECURITIES LAWS

71.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them in

their entirety into this Count.

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72.
Defendants actions or inactions resulted in excessive and unnecessary trading in the

Accounts.

73.
Lyons exercised control over the Accounts and engaged in careless, reckless,

unauthorized and excessive trading in the Accounts solely in order to generate commissions and

fees to Defendants and to the substantial detriment of Mrs. Montgomery and the Trust. At all

times, Lyons traded in the Accounts as if they were discretionary and in blatant disregard of his

responsibilities to Mrs. Montgomery and the Trust.

74.
In engaging in excess trading in the Accounts over which he had control, Defendant

Lyons acted with the intent to defraud or with willful and reckless disregard of the interests of

his clients, Mrs. Montgomery and the Trust.

75.
At all pertinent times, Lyons was employed by Raymond James, which failed to monitor

or supervise his actions, and accordingly, the actions of Defendants amount to churning under

federal securities laws.

76.
The result of the churning by Defendants, Lyons and Raymond James, was an

unwarranted increase of fee commissions and risk and substantial losses in the Accounts that

contained a substantial portion of the life savings of an elderly widow.

77.
As a result of the above, Mrs. Montgomery and the Trust suffered substantial losses

which include, but are not limited to, loss of past, present and future investment principal; loss of

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past, present and future interest on investment principal; loss of opportunity or reasonable return

on investments, and other losses and damages for which Defendants are liable, in solido.

VII.
COUNT III: FRAUDULENT OMISSIONS

78.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them in

their entirety into this Count, which Plaintiffs plead in the alternative to Count II.

79.
As described above, in connection with the purchase or sale of securities in the Accounts,

Lyons never consulted Mrs. Montgomery or Jerry Montgomery, and therefore failed to

communicate critical facts concerning the risks involved in the trades Lyons executed in the

Accounts. At all times, Raymond James failed to monitor or supervise the actions of Lyons.

80.
Mrs. Montgomery was at all times an elderly widow and an unsophisticated investor who

did not know of the omissions described above. Furthermore, Defendants failed to communicate

with Jerry Montgomery, in his capacity as agent or Trustee, about the Accounts or the gross

mismanagement of the Accounts by Defendants.

81.
Defendants knew, or in the exercise of reasonable diligence should have known, of the

omissions.

82.
Mrs. Montgomery, individually and as trustee, relied on Defendants fraudulent

omissions by Defendants to her detriment. Moreover, Defendants profited by omitting the

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critical information described above in the form of fees and commissions earned through trading

activities about which Mrs. Montgomery was not properly informed.

83.
As a result of the above, Mrs. Montgomery and the Trust suffered losses which include,

but are not limited to, loss of past, present and future investment principal; loss of past, present

and future interest on investment principal; loss of opportunity or reasonable return on

investments, and other losses and damages for which Defendants are liable, in solido.

VIII.
COUNT IV: FEDERAL SECURITIES LAW VIOLATIONS

84.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them in

their entirety into this Count.

85.
The Defendants knowingly, intentionally, and/or recklessly omitted material facts in their

handling of the Accounts. In engaging in such conduct, the Defendants acted with scienter, that

is, with an intent to deceive, manipulate or defraud or with a reckless disregard for the truth.

86.
By reason of the foregoing, the Defendants, directly and indirectly, have violated Section

10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5 thereunder, 17 C.F.R.

240.10b-5 and any other applicable law.

87.
As a result of the above, Mrs. Montgomery and the Trust suffered losses which include,

but are not limited to, loss of past, present and future investment principal; loss of past, present

and future interest on investment principal; loss of opportunity or reasonable return on

investments, and other losses and damages for which Defendants are liable, in solido.

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IX.
COUNT V: LOUISIANA SECURITIES LAW VIOLATIONS

88.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them in

their entirety into this Count.

89.
Because the relationship here at issue was that of broker to client, the Defendants were

also subject to the requirements of Louisianas securities laws, La. Rev. Stat. 51:712 et seq.,

which require, among other things, full and truthful disclosure of all material facts related to a

sale or offer to sell a security and that the broker not engage in any schemes or artifice to defraud

related to the sale or offer to sell a security.

90.
As described above, the Defendants, in connection with the offer to purchase or sell

securities, failed to state material facts necessary in order to make their statements not

misleading and intentionally engaged in a scheme to defraud and/or deceive Mrs. Montgomery.

91.
Defendants actions violated Louisianas securities laws, La. Rev. Stat. 51:712 et seq. and

any other applicable law.

92.
Mrs. Montgomery did not know of the untruths and omissions or the scheme to defraud

and/or deceive her, and neither did Jerry Montgomery.

93.
Defendants knew or in the exercise of reasonable diligence could have known of the

untruths and omissions.

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94.
Mrs. Montgomery and the Trustee relied on Defendants fraudulent misrepresentations or

omissions concerning the securities purchased by Defendants to her detriment.

95.
As a result of the above, Mrs. Montgomery and the Trust suffered losses which include,

but are not limited to, loss of past, present and future investment principal; loss of past, present

and future interest on investment principal; loss of opportunity or reasonable return on

investments, and other losses and damages for which Defendants are liable, in solido.

X.
COUNT VI: LIABILITY OF RAYMOND JAMES

96.
Plaintiffs hereby adopt all prior allegations in this Complaint and incorporate them into

this Count.

97.
Defendant Raymond James and/or its predecessor Morgan Keegan, were at pertinent

times herein employer(s) and principals of Defendant Lyons and a controlling party under 15

U.S.C. 78(t)(a) and any other applicable law.

98.
The above described wrongful acts and omissions, which caused damages to Mrs.

Montgomery and the Trust, were perpetrated by Lyons while in the course and scope of his

employment with Raymond James or its predecessor, Morgan Keegan.

99.
As such, Raymond James is responsible for the wrongful acts and omissions of Lyons,

since it utterly failed to monitor or supervise his actions.

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100.
Furthermore, Raymond James had a duty to Mrs. Montgomery, individually and as

trustee, and to Jerry Montgomery, to monitor and supervise the actions of Lyons, and it breached

that duty.

101.
Upon information and belief, Raymond James, a controlling party, failed to properly

supervise, investigate, monitor, and regulate the actions of Lyons, its employee.

102.
Raymond James, a controlling party, failed to create, implement, and enforce procedures

to properly supervise, investigate, monitor, and regulate the actions of Lyons, its employee.

103.
Consequently, Mrs. Montgomery and the Trust suffered losses which include, but are not

limited to, loss of past, present and future investment principal; loss of past, present and future

interest on investment principal; loss of opportunity for reasonable return on investments, and

other losses and damages for which Raymond James is liable.

XI.
DEMAND FOR JURY TRIAL

104.
Plaintiffs request a trial by jury on all of their claims.

WHEREFORE, Mrs. Montgomery, through her duly authorized agent, Jerry K.

Montgomery, and Jerry K. Montgomery, also in his capacity as Trustee of the Frazier J.

Montgomery and Anne B. Montgomery Irrevocable Trust, pray that after all due proceedings

have been had, there be judgment rendered herein in their favor and against Defendants

Raymond James & Associates, Inc. and James Edward Lyons for all damages reasonable in these

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premises resulting from the violations alleged above, plus all costs of these proceedings, interest,

attorney fees and expenses, and all other amounts and damages that Plaintiffs are entitled to

recover. Plaintiffs further pray for all other relief to which they are entitled, whether or not

specifically prayed for herein.

Respectfully submitted,

WIENER, WEISS & MADISON

A Professional Corporation

By:__/s/ R. Joseph Naus____________

R. Joseph Naus (B.R. #17074)
Frank H. Spruiell, Jr. (B.R. #1611)
333 Texas Street, Suite 2350 (71101)
P. O. Box 21990
Shreveport, LA 71120-1990
(318) 226-9100
(318) 424-5128, facsimile
Email: rjnaus@wwmlaw.com
Email: FSpruiell@wwmlaw.com

ATTORNEYS FOR PLAINTIFFS,

ANNE B. MONTGOMERY, THROUGH
HER AGENT, JERRY K.
MONTGOMERY, AND JERRY K.
MONTGOMERY, AS TRUSTEE OF
THE FRAZIER J. MONTGOMERY
AND ANNE B. MONTGOMERY
IRREVOCABLE TRUST

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