Unauthorized Trading and Abuse of Fiduciary Duty By Older Investor’s Grandsons
A Financial Industry Regulatory Authority (FINRA) arbitration panel has ruled that JP Morgan Securities (JPM) and its ex-brokers, Avi Elliot Schottenstein and Evan A. Schottenstein, must pay a senior investor $19M in her investment fraud claim over losses sustained from the unauthorized trading of complex products in her brokerage account.
The claimant is Beverley Schottenstein of Bal Harbour, Florida, of the family that owns holding company Schottenstein Stores Corp. The two former JP Morgan registered representatives are her grandsons.
In a hearing held over Zoom, the three-person FINRA arbitration panel in Boca Raton said that JP Morgan Securities and the two ex-brokers were liable for abuse of fiduciary duty, constructive fraud, fraudulent misrepresentations and omission, as well as elder financial abuse under Florida law.
The broker-dealer fired Evan Schottenstein in 2019. Avi Schottenstein also left JP Morgan Securities that year.
Our Florida investor fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at invsetorlawyers.com) represent high net worth individual investors, retail investors, senior investors, and institutional investors in recovering the investment losses they sustained due to broker fraud or negligence. Contact us at (813) 560-2992 today.
Florida Investor Sought Compensatory and Punitive Damages
In her FINRA arbitration claim, Beverley Schottenstein, as an individual and the trustee of her revocable trust, sought over $10M in compensatory damages as well as punitive damages.
She accused her grandsons of buying and selling different securities that the brokerage firm was a market maker for, as well as auto-callable structured notes, new issue offerings in preferred securities and debt, and other securities without her authorization.
Evan Schottenstein began investing his grandmother’s money for her in 2006 when he was a Citigroup Global Markets Inc. broker and then later while he was with Morgan Stanley (MS) and finally at JP Morgan Securities. His BrokerCheck record notes that he worked 13 years in the industry. Avi Schottenstein worked nine years in the industry, including as a Morgan Stanley broker.
Now, JP Morgan must pay $4.7M in compensatory damages, as well as $4.3M to rescind an investment that was made in the Coatue Private Equity Fund and return capital calls that were paid to Coatue. Evan Schottenstein has been ordered to pay his grandmother $9M in compensatory damages along with $172,630 in costs. Both he and the broker-dealer must pay half of Beverley Schottenstein’s legal fees. Meanwhile, Avi Schottenstein must pay his grandmother over $602K in compensatory damages.
The Schottensteins’ are not the only former JP Morgan Securities brokers to recently be accused of unauthorized trading in an older customer’s account. Last year, FINRA fined ex-JP Morgan registered representative Lauren L. Wing $5K for executing two trades totaling $314K for a senior investor without the latter’s permission.
Lauren Wing was suspended for a month. The firm fired her in 2019.
Elder Financial Exploitation
Unfortunately, senior investors can lose money because of securities fraud, negligence, or misconduct by family members as well as financial professionals. SSEK Law Firm represents senior investors seeking to recover losses from the brokerage firm and its registered representatives responsible.