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Articles Posted in Arbitration Rulings

Investment Losses During the Coronavirus Has Investors Scrambling for Answers

If you are like many Americans with investments, you may be struggling to grapple with the massive losses affecting your portfolio as the novel coronavirus (COVID-19) continues to wreak havoc on the economy, the markets, the job industry, and people’s lives. 

What you may not realize is that your investment losses may also be a result of broker fraud or negligence on your stockbroker or investment adviser’s part, which is where our investor attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm) can help you.

Investment Losses During COVID-19 Pandemic May Have Been Caused By Fraud Or Negligence

According to experts, George Friedman and Rick Ryder, fears about the novel coronavirus (COVID-19) and the resulting market turbulence will lead to a rise in investor fraud claims and FINRA arbitration cases. Friedman is the Securities Arbitration Alert editor-in-chief and Ryder is the Securities Arbitration Commentator president and founder. 

In a recent blog post, What’s Past is Prologue, they spoke about how customers will wonder whether their stockbrokers and investment advisors properly handled their accounts, which are now being negatively affected by the ongoing market volatility. 

Merrill Lynch Fined For Involvement In Puerto Rico Bond Fraud Case

In a recent award, a Financial Industry Regulatory Authority (FINRA) arbitration panel has decided that Merrill Lynch must pay a former professional baseball player and his wife $1.7 million in compensatory damages, plus $88,758 in costs, for losses they sustained from investing in Puerto Rico bonds and closed-end bond funds.

The retired MLB player is Angel Pagan and his wife is Windy Pagan, a former Ms. Puerto Rico. Angel was an outfielder for the NY Mets, the Chicago Cubs, and the San Francisco Giants before retiring to live on the island.

National Planning Ordered to pay $2.6M to Older Investor

A Financial Industry Regulatory Authority (FINRA) panel is ordering National Planning Corp. to pay a customer, who is in her eighties, $2.6M after her former stockbroker, William August Glaser, sold her unsuitable investments. The investments including fraudulent promissory notes and non-traded REITs (real estate investment trusts). $1M of the award is for punitive damages.

William Glaser, who was fired by National Planning and barred by FINRA in 2017, is currently in prison for wire fraud.

A Ninth Circuit panel has struck down JP Morgan Securities’ arbitration win in a wrongful termination case brought by one of its former financial analysts. The appeals court found that the Financial Industry Regulatory Authority (FINRA) panel acted unreasonably when it refused to delay the rest of the arbitration proceedings after the firm’s ex-financial analyst, Bradley Sayre, and his lawyer both had medical emergencies.

Sayre couldn’t make part of the proceedings because his wife had a baby. Not only that, but his attorney wasn’t able to be present for all of the hearing after suffering a stroke.

Sayre asked for a continuance, but the FINRA panel denied his request, deciding that it could make an impartial ruling even without his presence or that of his lawyer. The arbitration panel ruled in favor of the financial firm.

Former Raymond James (RJF) broker John Charles Wyshak is under scrutiny by our investor lawyers at SSEK Law Firm. If you are someone who previously worked with Wyshak as your financial representative while he was registered with Raymond James or any other broker-dealer, and you suffered substantial losses, your first consultation with us is a free, no obligation case assessment.

After over thirty years in the securities industry, Wyshak is no longer a registered broker or investment adviser. Recently, a Financial Industry Regulatory Authority (FINRA) arbitration panel ruled against Wyshak and in favor of Raymond James, ordering him to pay the firm nearly $1M for previous investor fraud claims involving his allegedly fraudulent actions and for breaching an agreement with the broker-dealer.

Wyshak left Raymond James last year. Now, the FINRA arbitrators want him to pay the firm more than $932K in compensatory damages, in addition to 10% interest and thousands of dollars in other fees.

Four Stifel, Nicolaus & Co. (SF) clients were awarded $1.5M in compensatory damages in their Financial Industry Regulatory Authority (FINRA) arbitration case against the brokerage firm. According to AdvisorHub, the claimants are accusing the broker-dealer of not properly supervising Stifel Nicolaus broker Kenneth D. Blumberg, who they contend invested up to 80% of their portfolio in biotech stocks.

The claimants also said that Blumberg mismarked trades and encouraged them to add more positions even as they were losing money. They are alleging the following:

  • Breach of fiduciary duty

Two different groups of investors were recently awarded nearly $9.3 million in their respective Puerto Rico bond fraud claims against UBS Financial Services (UBS). These are just the latest Financial Industry Regulatory Authority (FINRA) arbitration claims where the Swiss giant and its Puerto Rico-based brokerage firm have been ordered to pay customers after selling over $10 billion of closed-end funds that were heavily invested in the island’s municipal debt. To date, UBS has paid hundreds-of-millions-of-dollars to investors in either arbitration awards or settlements.

In one of these latest Puerto Rico investor fraud cases, the claimants are three investors and their related businesses and trusts. The customer claimants contend that UBS violated FINRA’s rules and the U.S. territory’s securities laws, as well as committed other fraudulent acts. Now, the FINRA arbitration panel has awarded them $4.25 million in compensatory damages, interest, and $170,000 for costs.

In the other Puerto Rico bond fraud claim, the claimants were customers alleging constructive fraud, common law fraud, breach of fiduciary duty, negligent misrepresentation, negligent supervision, breach of contract, and fraudulent concealment. The FINRA arbitration panel awarded them $4.8 million in damages.

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded 23 investors $3M in their claim against Spire Securities, its CEO David Lloyd Blisk, and CCO Suzanne Marie McKeown. The broker-dealer and its executives were accused of inadequately supervising former broker Patrick Evans Churchville, whom the investors contend fraudulently sold them investments that caused them to lose money in a $21M Ponzi scam.

Churchville sold the investments through ClearPath Wealth Management, a registered investment adviser that he operated outside of Spire Securities. Still, the claimants contended that the broker-dealer should have prevented Churchville from causing them financial harm while he was a Spire Securities broker and could have done so had they properly overseen him.

Churchville pleaded guilty in 2016 to criminal charges accusing him of operating a $21M Ponzi scam. In 2017, he was sentenced to seven years in prison for tax evasion and wire fraud.

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded $519,000 to Stephen and Brenda Balock in their investor fraud claim against Morgan Stanley (MS). The couple contends that that one of the firm’s brokers, Tim J. Prouty, placed their funds in investments that were complex and inappropriate for them, causing them to lose money in eight accounts between 2012 and 2015. They filed their claim against Morgan Stanley in 2016.

The Balocks began working with Prouty after Stephen’s employer, the Public Service Co. of New Mexico, compelled him into early retirement due to downsizing. He had never worked with a broker before then.

The couple wanted to invest in certificates of deposit. Instead, Prouty placed them in a Morgan Stanley investment advisory program that involved more complex investments, such as options contracts, derivates, junk bonds, and exchange-traded funds. In their investor claim against Morgan Stanley, the Balocks made a number of allegations, including the following:

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