Rosen Capital Partners, LP, et al. v. Merrill Lynch Professional Clearing Corp.
FINRA Arbitration No. 09-03094
Testifying expert for Claimant. Award in favor of Claimant: $79.42 million.
$125 MM option hedge fund Claimants asserted breach of contract, duty of good faith and reasonable commercial standards of fair dealing, Articles 8 & 9 of the New York U.C.C., fraud and negligence in applying margin and risk requirements, unauthorized refusal to clear risk-reducing option hedge transactions, and wrongful liquidation via fraudulent inducement by senior risk management of a prime broker.
Bayou Group, LLC v. Goldman Sachs
FINRA Arbitration No. 08-01763
Testifying expert for Claimant. Award in favor of Claimant: $20.58 million.
Claimant, Trustee for a Creditor’s Committee in Bankruptcy, asserted fraud, failure to investigate the fraud, and fraudulent transfers by prime broker Respondents in connection with $450 million hedge fund Ponzi scheme.
Manhattan Investment Fund Ltd. v. Bear Stearns Securities Corp.
U.S. Bankruptcy Court, SDNY, Adv. Pro. No. 01-02606
Testifying expert on notice issue for Plaintiff, Trustee of a Creditor’s Committee in Bankruptcy.
Court found prime broker Defendant to be on notice of fraud. Jury decision for Defendant based on good-faith defense. Plaintiff asserted fraud, failure to investigate the fraud, and fraudulent transfers to prime broker Defendant in connection with $450 million hedge fund Ponzi scheme.
Insurance Commissioner for the State of Delaware, as Receiver for National Heritage Life Insurance (NHL) Company, a Company in Liquidation, v. Bear Stearns & Co., Inc.
Ninth Judicial Circuit, for Orange County, Florida, Magistrate Division 2, Case No. 48-1996-CA-000669-O
Testifying expert for Plaintiff. Magistrate Order in favor of Plaintiff: $26.85 million.
Plaintiff asserted breach of contract and good faith in providing investment advisory services, knowingly selecting and constructing a portfolio of high-risk, extremely volatile collateralized mortgage derivative securities inappropriate for Plaintiff’s investment objectives and providing analyses, projected yields and other financial information which was deceptive, misleading and inaccurate, and which Plaintiff could not independently verify.
Hauser v. Merrill Lynch
NYSE Arbitration No. 1993-03312
Testifying expert for Claimant. Award in favor of Claimant: $3.5 million
Swiss Claimant asserted fraud, misrepresentation, and failure to supervise registered representatives of a Lugano, Switzerland branch office of Respondent in connection with a “black money” scheme that damaged the Swiss trust company used as a conduit for cash flows and excessive foreign currency trading in fiduciary accounts.
John Tilling v. S.W. Bach & Co.
NASD Arbitration No. 04-01896
Testifying expert for Claimant. Award in favor of Claimant: $471,000, including $291,000 in disgorgement of commissions and fees. British Claimant, Member of Lloyds of London, asserted churning, unsuitability, breach of fiduciary duty and common law fraud related to discretionary transactions in stocks and Treasury bonds.
Blumenfeld, et al. v. Refco
NFA Arbitration No. 96-186
Testifying expert for Claimant. Award in favor of Claimants: $43 million.
As part of a $100 million Ponzi scheme by an Introducing Broker (IB) the wrongful allocation of Treasury futures and options transactions on the Chicago Board of Trade (CBOT) by a Futures Commission Merchant (FCM) across Claimants’ accounts, Claimants asserted fraud, breach of contract and good faith, failure to supervise floor trading and post-transaction clearance by back office personnel in violation of industry and exchange rules.
Securities and Exchange Commission v. Abraham and Sons Capital and Brett G. Brubaker
Admin. Proc. File No. 3-9448
Testifying expert for the S.E.C.
Civil penalties and bar from association with broker-dealer or registered investment advisor.
Registered investment advisor and its president found to have made material fraudulent misrepresentations in connection with stock transactions, mispricing and reported performance of a managed short-stock portfolio.
Parker v. Goldberg
NASD Arbitration No. 94-02670
Testifying expert for Claimant. Award in favor of Claimant: $260,000
Registered investment advisor and its president made fraudulent representations to, and effected imprudent discretionary investments for Claimant in stocks, private placements, limited partnerships, and direct investments.
Pon v. Shearson
NYSE Arbitration No. 2000-01748
Testifying expert for Claimant. Award in favor of Claimant: $1,000,000 + $250,000 punitive damages.
Misrepresentation of investment performance and recommendation of unsuitable equity securities.
Lane v. Drexel Burnham Lambert
American Arbitration Association No. 13-136-00617-88
Testifying expert for Respondent. Award in favor of Respondent: $6,000,000
Unsecured debit arising from futures trading loss in metals and financial indices in excess of $22 million.
Securities and Exchange Commission v. Jeremiah J. and Michael P. Hegarty
Admin. Proc. File No. 3-10455
Testifying expert for S.E.C.
Civil penalties and bar from association with broker-dealer or registered investment advisor.
Principals of Hyannis Trading Advisors defrauded Clients of approximately $6.5 million under management in option trading accounts, and failed to disclose that they had lost the ability to calculate fundamental account balances and other information, misrepresented past performance, collected illegal performance fees, and had abandoned risk-limiting techniques that they had assured Clients would be utilized.
Securities and Exchange Commission v. Parnassus Investments
Admin. Proc. File No. 3-9317
Testifying expert for S.E.C. Cease and desist order with civil penalties.
Court found that the Investment Advisor had overstated the net asset value (NAV) of the diversified open-end fund (mutual fund) in violation of the Investment Act of 1940 by failing to use a current sale methodology to fairly value a holding in keeping with Accounting Series Releases 113 and 118, Investment Company Act Release No. 6295, S.E.C. Accounting Rules.
Weingarden v. Prudential Securities
NASD Arbitration No. 03-04704
Testifying expert for Claimant. Award in favor of Claimant: $1,900,000
Claimant alleged unsuitability and failure to disclose material risks in connection with stock and margin transactions, negligent supervision and violation of Florida Statutes and trust law in connection with unlawful transfers of securities into and out of an Irrevocable Trust.
Fanam, LLC v. Merrill Lynch
NASD Arbitration No. 04-05063
Testifying expert for Claimant. Compensatory Award in favor or Claimants: $980,000
Claimant asserted breach of contract, negligence, failure to supervise, willful and reckless conduct and breach of fiduciary duty in connection with stock and options transactions in unapproved strategies and unpermitted wire transfers out of Claimant’s account to a gambling casino in connection with criminal actions by the managing partner/trader of the Claimant hedge fund, for which he was imprisoned.
Goodman v. Mirco Teta and CIBC Oppenheimer & Co.
NASD Arbitration No. 98-04636
Testifying expert for Claimant. Award in favor of Claimant: $74,000
Panel found that Respondent broker committed securities fraud in violation of Rule 10b-5 of the Securities and Exchange Act of 1934 through misrepresentation in connection with stock transactions upon which Claimant reasonably relied.
Errico v. Bank of America
JAMS Ref. No. 1400008354
Testifying expert for Claimant. Award in favor of Claimant of $280,000.
Claimant alleged gross negligence, breach of contract by a bank trust department in the mismanagement of a discretionary equity portfolio, and fraud by misrepresentation in the undisclosed use of debt leverage.
Gruhn v. E*Trade Securities
NASD Arbitration No. 01-00492
Testifying expert for Respondent. Award in favor of Claimant: $191,000
German on-line investor and computer hacker sought over $5 million in compensatory and punitive damages in connection with unapproved stock and naked option transactions executed in a cash account approved for covered call writing only, and in excess of account buying even were it a margin account power pursuant to Regulation T. Claimant nonetheless asserted breach of contract, conversion, fraud and negligent misrepresentation. As Respondent’s expert, gave testimony regarding new account misrepresentations by investor, inaccuracies in the third-party software utilized by the Claimant to identify and select the option transaction, Claimant expert’s misinterpretation of covered-call definition under Regulation T, the inadequacy of Claimant account net equity to support initial margin requirements, absence of economic return due to parity condition of in-the-money option prices at the time of transaction, and consequent absence of damages. Panel, finding no damages, directed Respondent brokerage firm to share with Claimant half of the $382,000 error account profit from having liquidated the violative stock and option transaction to partially offset Claimant’s travel and hearing expenses.
NASD Dept. of Enforcement v. Keith Medeck
Disciplinary Proceeding # E9B2003033701
Testfying expert for Respondent. In 2006, Hearing Panel barred Respondent from associating with any NASD member in any capacity for churning a customer’s account in violation of Rule 10(b)-5 of the Securities and Exchange Act and a $41,493 monetary fine in connection with stock and option transactions. In 2009, the Hearing Panel’s decisions were reversed on appeal to the National Adjudicatory Council, FINRA.
Kaminsky, et al. v. Spencer Trask Securities
NASD Arbitration No. 00-05628
Testifying expert for Claimants. Award in favor of Claimants: $294,000 + $50,000 in punitive damages.
Case involved verbal contracts entitling Claimants to participate in most successful IPO in Wall Street history, with consideration of Rule 144 Restricted shares and lock-up agreements in connection with a spot secondary.
Tornquist v. Shearson
NYSE Arbitration No. 1990-07063
Testifying expert for Claimant. Award in favor of Claimant: $900,000. Disciplinary referral of branch manager.
Claimant alleged unsuitable investment recommendations, misrepresentation, and churning in stock and options by registered representative exercising de facto discretion, and failure to supervise by branch manager.
Flanagan v. Prudential Securities
NASD Arbitration No. 91-00001
Testifying expert for Claimant. Award in favor of Claimant: $982,000
First make-whole compensatory award secured in arbitration in connection with unsuitable limited partnership investments jointly marketed by securities brokers and insurance agents to emergent retirees without adequate risk disclosure of their speculative risk, illiquidity and structural performance and cash flow characteristics. Claimants were a married couple newly retired from a major oil company who had been directed to consult with a professional investment advisor as a condition of receiving lump sum distribution of their retirement assets.
Coke v. Prudential Securities
NASD Arbitration No. 89-00700
Testifying expert for Claimant. Award in favor of Claimant: $1,030,000
Claimant, a mother of pre-school children and widow of a U.S. Marine Corps helicopter pilot, alleged gross negligence, breach of fiduciary duty and inadequate risk disclosure by a branch manager exercising de facto discretion over her brokerage account in connection with naked put and call option transactions and the purchase of unsuitable and speculative limited partnership investments on her behalf.
Wholey, et al. v. Goldman Sachs
NYSE Arbitration No. 1992-02598
Testifying expert for Claimants. Rescission Award in favor of Claimants: $2,800,000 + fees
Claimants alleged unsuitability, material misrepresentation and inadequate disclosure of risk in connection with recommended purchases of U.K. auction rate and remarketed variable term preferred shares of Ratners Group that collapsed in $450 million par amount of failed auctions.
Roth v. GKN Securities
NASD Arbitration No. 98-04988
Testifying expert for Claimant. Rescission Award in favor of Claimants: $582,215
Claimant alleged failure to give proper notice of margin call, unauthorized liquidation by introducing broker (IB) upon instruction by clearing broker and breach of contract with Claimant. Testified as to the duties of clearing v. introducing brokers and reasonable notice prior to margin liquidation, and appropriateness of “rescission” as damage remedy. Introducing broker ordered to replace liquidated shares at appreciated value as of date of Award.