March 10, 2014 Comments (0) Blog, Securities Fraud

FINRA Awards suggest margin remains problem in securities industry.

(Last Updated On: July 17, 2015)

Based on recent awards, it appears that margin continues to be a problem in the securities industry.  From January 1, 2013 to December 31, 2013 there were 49 decided that at least mentioned margin as an issue in the case.

Margin trading is basically borrowing money from your broker-dealer to purchase stock. It’s like a loan and the stock you purchase is collateral. When you open a margin account, the “margin” is the amount of money you deposit into the account.  Trading on margin not only increases your purchasing power and potential profits, but also your risk and downside. When you trade on margin you run the risk of losing more money than you invested. For more information on FINRA margin claims, visit http://www.whitesecuritieslaw.com/2013/10/10/understanding-how-margin-trading-works/.

A summary of the 2013 awards that at least mentioned margin as an issue and where an award was entered in favor of the Claimant are as follows:

Case No.

Claimant(s)

Respondent(s)

Award of Panel

11-03013 Auto City Service, Inc., Auto City Clark, Inc., and Fowlerville Exit Shell Service, Inc. J.P. Morgan Securities, Inc.,   J.P. Morgan Securites, LLC Respondents J.P. Morgan Securities, Inc. and J. P. Morgan Securities LLC are jointly and severally liable for and shall pay to Claimants, Auto City Service, Inc., Auto City Clark, Inc. and Fowlerville Exit Shell Service, Inc., the sum of $1,680,000.00 in compensatory damages; Respondents J.P. Morgan Securities, Inc. and J. P. Morgan Securities LLC are jointly and severally liable for and shall pay to Claimants the sum of $242,000.00 in attorneys’ fees pursuant to statute.
11-03894 Jeffrey Foster TD Ameritrade, Inc. Respondent, TD Ameritrade, Inc. is liable for and shall pay to Claimant the sum of $61,732.00 in compensatory damages.
11-04271 Felix Bernard-Diaz BBVA Securities of Puerto Rico, Inc.;  Rafael Colon Ascar With respect to Claimants’ claims, Respondents BBVA and Ascar are jointly and severally liable and shall pay to Claimants Felix Bernard-Diaz, Julian Rodriguez and Luz Rodriguez compensatory damages and costs in the following amounts: a.  For Bernard-Diaz: $635,500.00 in compensatory damages and $15,000.00 in costs; and b. For Julian Rodriguez and Luz Rodriguez $547,000.00 in compensatory damages and $15,000.00 in costs.
09-07182 Bernard Reznick as Trustee of the Reznick Survivor’s Trust; Sadie Reznick Non-Exempt Marital Trust Kenneth Ro, Jon Paul Borro Javallana and Deutsche Bank Securities, Inc. Respondents Kenneth Ro, Jon Paul Borro Javellana and Deutsche Bank Securities Inc. are jointly and severally liable for and shall pay to Claimant Bernard Reznick as Trustee of the Reznick Survivor’s Trust compensatory damages in the amount of $100,000.00 and as Trustee of the Sadie Reznick Non-Exempt Marital Trust compensatory damages in the amount of $80,000.00.
12-01306 LNR Investments LP, Bevrose Investments LP, Emmrose Investments LP, and Penrose Investments LP Oppenheimer & Co., Inc. Respondent Oppenheimer & Co., Inc. is liable for and shall pay to Claimants, LNR Investments LP, Bevrose Investments LP, Emmrose Investments LP, and Penrose Investments LP, the sum of $75,000.00 in attorneys fees pursuant to statute.
10-03554 College Health and Investment, Ltd. Wells Fargo Advisors, LLC (f/k/a Wachovia Securities, LLC) Respondent is liable and shall pay to Claimant compensatory damages of $2,298,062.00 which includes prejudgment interest through May 17, 2013 at the legal rate provided by Florida law.  In or about August 2011, Claimant, through its counsel, sent a letter to a number of nonparties who had received subpoenas in this arbitration pursuant to requests for them by Respondent.  Claimant did not provided these letters to FINRA or to Respondent’s counsel.  Claimant’s request for margin interest expense is granted in the amount of $418,987.00 which includes prejudgment interest through May 17, 2013 at the legal rate provided by Florida law.
10-04327 Raveen Arora, Marguerite Arora, The Arora Family Trust Citigroup Global Markets, Inc., Morgan Stanley Smith Barney, LLC, Chuck A. Roberts Respondents Chuck A. Roberts is liable for and shall pay to Claimants the principal sum of $185,848.00 in compensatory damages.  If the amounts payable are not paid in full by Respondent Chuck A. Roberts within 30 days after service of the award, Respondents Citigroup Global Markets, Inc. and Morgan Stanley Smith Barney, LLC are jointly and severally liable for and shall pay the outstanding sum to Claimants and Respondents Citigroup Global Markets, Inc. and Morgan Stanley Smith Barney, LLC shall be subrogated to Claimants’ rights to the extent of payment.  Respondents are jointly and severally liable for and shall pay to Claimants the sum of $16,380.00 in compensatory damages.
12-01887 Rakesh K. Sharma  NSM Securities, Inc. Respondent NSM is liable and shall pay to Claimant compensatory damages in the sum of $125,000.00, inclusive of pre-judgment interest.  Respondent NSM is liable and shall pay to Claimant attorneys’ fees in the sum of $30,000.00 pursuant to Ark. Code Ann.
09-05316 Shahin Aarabi Ameriprise Financial Services, Inc. and Yousef Jamshidipour Respondents Ameriprise and Jamshidipour are jointly and severally liable for and shall pay to Claimant the amount of $66,356.00 in compensatory damages.
09-05596 Lloyd A. Gillespie Oppenheimer & Co., Inc.; Aegis Capital Corp., and Joseph Gunnar & Co., LLC Respondent Oppenheimer & Co., Inc. is liable for and shall pay to Claimant Gillespie, the sum of $848,248.20 in compensatory damages; Respondent Oppenheimer & Co. is liable for and shall pay to Claimant Gillespie, pre-judgment interest on the above-stated sum at the rate of 5% per annum from and including September 25, 2009, through and including January 9, 2013; Respondent, Oppenheimer & Co., is liable for and shall pay to Claimant Gillespie, the sum of $174,000.00 in attorneys’ fees pursuant to the Texas Securities Act; Third-Party Respondent, Joshua Barg is liable for and shall pay to Third-Party Claimant, Aegis Capital Corp., the sum of $87,500.00.

 

Financial advisors have a fiduciary duty to put their client’s needs ahead of their own.  If a stockbroker recommends margin for the explicit purpose of generating commissions, that broker or his/her firm may be held liable for the losses incurred as a result.

If you believe that you are the victim of your advisor recommending excess margin in your account, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.  For more information on The White Law Group visit http://www.whitesecuritieslaw.com.

 

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