Clair R. Couturier, Jr. vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., Phil Scott Group, et al FINRA Dispute Resolution No. 11-00867
Lax & Neville LLP recently won a $1.7 million FINRA arbitration award against Merrill Lynch and Phil Scott for sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income and Blue Chip Portfolios. The case was tried during twenty-eight (28) hearing sessions. During the arbitration process, Claimant focused on the Merrill Lynch Phil Scott Team’s blatant disregard of industry and regulatory obligations, and Claimant’s risk tolerances and investment objectives. Claimant also focused on Merrill Lynch’s lack of supervision of Phil Scott and his team members. In finding for the Claimant, the Arbitration Panel stated in the Award that it was “particularly concerned by the following actions of Respondents: (i) Misrepresentations and omissions were contained in the unrestricted marketing materials supplied by Respondents to Greg Porter, who in turn, having been cloaked with apparent authority by Respondents, presented the misleading materials to Claimant. This wrongdoing was caused by Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s inadequate supervision before the fact and aggravated by its failure to take corrective action after it received notice of the communications; (ii) Respondents’ manner of using the Personal Investment Advisory Questionnaire as a disclosure device was misleading and had the capacity to deceive. Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s continuing approval of this use constitutes inadequate supervision; and (iii) Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s failure to comply with its own ARMOR report procedures constitutes a breach of its duties toward Claimant and another example of inadequate supervision.” (See FINRA Arbitration Award). In the Award, the Arbitration Panel further stated, “This list is not all-inclusive but is intended to give Respondents the benefit of some of the Panel’s conclusions so Respondents can modify their conduct accordingly.” (See FINRA Arbitration Award). The FINRA arbitration award against Merrill Lynch and Phil Scott consisted of $1,100,000 in compensatory damages, $540,144 in attorneys’ fees, along with costs in the amount of $74,341.
Lax & Neville Win $263,219 FINRA Arbitration Award Brought By Current Morgan Stanley Smith Barney Employees For Payment Of Their Back-End Bonuses
On August 23, 2012, Lax & Neville LLP, a leading national securities arbitration law firm, won a FINRA arbitration award against Morgan Stanley Smith Barney for failing to pay two of its current employees their earned back-end bonuses. In the case won by our firm, FINRA Case No. 11-02261, the Panel awarded the Claimants, Richard M. Schwartz and Alan Jacobson, the entire amount of compensatory damages they were seeking, $263,219, plus 9% interest from October 5, 2010 until the Award is paid in full. This equitable result is a win for these two financial advisors who were not paid their earned compensation.
If you are a financial advisor who has not been paid your back-end bonus, or any other due compensation, please contact Lax & Neville LLP at (212) 696-1999 to discuss your potential matter.
To view this Award, click [ here].
Kevin Kaiser vs. Raoul's Restaurant Corp., Cindy Smith et al. - Index No. 112674/2007
Lax & Neville LLP successfully wins a summary judgment motion in a case defending Cindy Smith, an employee of Raoul's Restaurant Corp., a well-known restaurant in New York City. On May 30, 2012, the Honorable Louis B. York granted Ms. Smith's motion for summary judgment and directed entry of judgment in favor of Ms. Smith. Specifically, Judge York dismissed the Plaintiff's age discrimination and defamation claims against Ms. Smith.
Dr. Karabi Sinha vs. UBS Financial Services, Inc. - FINRA No. 10-02584
On April 25, 2012, Lax & Neville LLP and Deutsch & Lipner, both leading securities arbitration law firms, won a FINRA arbitration award against UBS Financial Services, Inc. for improper sales practices and fraud in connection with UBS's marketing and sale of a Structured Product - the Lehman Return Optimization Security tied to the S&P 500. UBS is reported to have sold as much as $1 billion of Lehman's Structured Notes to its customers. It also sold other Structured Products which were mis-marketed and sold to UBS customers in inappropriate ways.
In the case won by our team, FINRA Case No. 10-02584, the Panel awarded the Claimant damages of $154,479, plus interest from October 1, 2008 until the Award is paid in full. The award places our client in the exact same position she would have been in had Lehman not filed for bankruptcy. The Award grants her damages equal to the value the security would have had on the maturity date if Lehman had not filed bankruptcy, less the current value of the security.
This equitable result is another win for our many clients who were deceived when the product was sold to them. The Statement of Claim in the case alleged that UBS did not inform the Claimant that these supposedly principal-protected securities were in fact the unsecured debt of the then-troubled Lehman Holdings, and that UBS did not inform its clients about what it (UBS) knew about Lehman's troubles. UBS tried to defend the case by alleging it had made full disclosure, and that the sales had been made in December 2007 -- which UBS alleged was before Lehman's troubles were known. As it had in every other prior case in which our legal team was involved, the arbitrators rejected UBS's defenses.
To view this Award, click [ here].
John J. Baker, Natalie N. Baker and John Baker, as Personal Representative of the Estate of Harriet B. Baker vs. Merrill Lynch Pierce, Fenner & Smith, Incorporated - Index No. 11-108492
Justice J. Lobis of the Supreme Court of the State of New York has denied Merrill Lynch's Motion to Vacate an $880,000 FINRA Arbitration Award against Merrill Lynch for purported sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income Portfolio. In its Decision, the Court stated, "there is no basis for the court to vacate the Award...Respondent has not made a showing that it was subject to a fundamental unfairness such that it was deprived of a fair hearing." Accordingly, the Court confirmed the FINRA Arbitration Award against Merrill Lynch. During the arbitration process, Lax & Neville LLP focused on the Merrill Lynch Phil Scott Team's disregard of industry and regulatory obligations. The Claimants asserted that the Merrill Lynch Phil Scott Team ignored the Claimants' individual risk tolerances and investment objectives when it recommended that 100% of Claimants' assets be invested in the Merrill Lynch Phil Scott Team Income Portfolio, which consisted of 100% equities. The FINRA Arbitration Award, which was rendered against Merrill Lynch on June 23, 2011, awarded the Claimants $880,000 in compensatory damages, and granted Claimants' Motion for Sanctions "assess[ing] fees for hearings on discovery to Respondent as sanctions against Respondent for untimely compliance with the Panel's orders to compel the production of documents."
Westminster Securities Corp. v. Petrocom Energy Limited, Petrocom Limited and Howard Au - 11-607
Lax & Neville successfully defends appeal of a significant American Arbitration Association ("AAA") award against Petrocom Limited and Petrocom Energy Limited ("Petrocom") (中港印能源集团有限公司("中港印"). Lax & Neville represented Westminster Securities Corporation ("Westminster") before the Second Circuit Court of Appeals, which has affirmed the ruling of Judge Cote in the Southern District Court of New York confirming the AAA arbitration award against Petrocom, a Chinese coal blending company. In the underlying arbitration, the Tribunal determined that Petrocom wrongfully failed to pay fees and issue warrants when Westminster successfully raised over $55 million for Petrocom and its Chairman and Chief Executive Officer, Mr. Howard Au (区可). Specifically, the Tribunal awarded Westminster approximately $2,250,000 in damages, which included placement agent compensation, attorneys' fees and costs and a $50,000 sanction against Petrocom for its "flouting" of the Tribunal's Order to have John P. O'Shea appointed to the Board of Directors of Petrocom, plus a total of 4,080,000 in Warrants. Based upon shareholder reports from Petrocom a reasonable valuation for these warrants is believed to be $2.00 per warrant (at a minimum), the total damages awarded to Westminster exceeded $10 million. The Second Circuit Panel held that the Tribunal's Award should be affirmed since the Tribunal provided a colorable justification when denying Petrocom's argument that the tail provision only applied when the placement agreement was terminated, and not when it expired. The Second Circuit Panel reasoned that the placement agreement's survival clause extended the tail provision in the event of termination or expiration, and therefore, Westminster was owed fees by Petrocom. The Second Circuit Panel also held that contrary to Petrocom's argument, Westminster's unjust enrichment clause was encompassed in the parties' agreement to arbitrate since the parties' arbitration agreement was worded broadly. Since Petrocom was enriched by Westminster's efforts to introduce several potential investors, the Second Circuit held that Westminster's unjust enrichment claim clearly related to the parties' placement agreements, and therefore the claim was governed by the arbitration clause.
Douglas and Kristin Mirabelli v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - FINRA No. 10-03400
Lax & Neville LLP recently won a $1.2 million FINRA arbitration award against Merrill Lynch for sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income Portfolios. The case was tried during twenty-three (23) hearing sessions. The FINRA arbitration award against Merrill Lynch consisted of $800,219 in compensatory damages which represented Claimants' entire net out-of-pocket losses and interest at the rate of 6% per annum from July 26, 2010 through the date the Award is paid in full. In addition to the $800,219 award in compensatory damages, the Panel awarded Claimants all attorneys' fees requested in the amount of $391,474, along with their costs in the amount of $47,339.91. All hearing session fees were also assessed against Merrill Lynch.
OBEX Securities, LLC vs. Healthzone Limited – Index No. 10-6876 (SAS)
Lax & Neville LLP successfully wins a summary judgment motion in a case defending Healthzone Limited (“Healthzone”), an Australian based health store against claims raised by OBEX Securities, LLC (“OBEX”), a small broker-dealer. On November 3, 2011, the Honorable Shira Scheindlin granted Healthzone’s motion for summary judgment and directed entry of judgment in favor of Healthzone. Specifically, Judge Scheindlin dismissed, with prejudice, OBEX’s breach of contract claim against Healthzone as there was no evidence that Healthzone breached the placement agent agreement because OBEX never introduced any individual or entity to Healthzone that ultimately invested in Healthzone.
Scottrade, Inc. v. Broco Investments, Inc., Valery Maltsev, and Genesis Investments, LLC, 10 Civ. 3537 (RJH)
Lax & Neville LLP successfully defended Genesis Investments, LLC, in a case in which Plaintiff Scottrade, Inc. ("Scottrade"), a securities broker-dealer, attempted to hold Genesis responsible for the actions of other individuals and entities, which "hacked" into Scottrade's computer systems and executed a series of purchases and/or sales in the accounts of Scottrade customers to "pump" up and/or "dump" thinly traded securities for a profit. On March 31, 2011, the Honorable Judge Holwell of the U.S. District Court for the Southern District of New York granted Genesis's motion to dismiss in its entirety and stated that this case presented a question of first impression, i.e., " does a securities broker, whose customers have been defrauded, and who reimburses his customers-but to whom the customers have not assigned their claims, and who other than the reimbursements alleges no damages whatsoever-have standing to sue the alleged fraudsters for violations of [various securities laws]?" The Court held that since Scottrade was not an "actual purchaser or seller of securities," it lacked standing to pursue most of its claims against Genesis, and also dismissed Scottrade's remaining claims.
Westminster Securities Corp. v. Petrocom Energy Limited, Petrocom Limited and Howard Au - 10 Civ. 7893 (DLC)
Judge Cote has confirmed an American Arbitration Association Award against Petrocom Limited and Petrocom Energy Limited ("Petrocom"), a Chinese coal blending company that was recently highlighted in a New York Times article. The esteemed Tribunal of top international arbitrators determined that Petrocom failed to pay placement agent fees and issue warrants when Westminster Securities Corporation ("Westminster") raised over $35 million for Petrocom and its Chairman and Chief Executive Officer, Mr. Howard Au. Specifically, the Tribunal awarded Westminster approximately $2,250,000 in damages, which included placement agent compensation, attorneys' fees and costs and a $50,000 sanction against Petrocom for its "flouting" of the Tribunal's Order, plus a total of 4,080,000 in Warrants. Considering that these warrants are believed to be valued at $2.00 per warrant (at a minimum), the total damages awarded to Westminster exceeded $10 million.
Lax & Neville LLP, on behalf of clients of the Merrill Lynch Phil Scott Team, recently won an $880,000 FINRA arbitration award against Merrill Lynch for purported sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income Portfolio. Brian Neville and Barry Lax of our office tried the matter which included twenty-six (26) hearing sessions. In addition to the $880,000 award in compensatory damages, the Panel also granted Claimants' Motion for Sanctions and "assessed fees for hearings on discovery to Respondent as sanctions against Respondent for untimely compliance with the Panel's orders to compel the production of documents."
David B. Newman v. Family Management Corporation et al.
Lax & Neville LLP, successfully defended FM Low Volatility Fund, a general partnership, in a securities class action law suit. A group of investors sought to hold FM Low Volatility Fund liable for investments made to feeder funds that in turn invested with Bernard L. Madoff Securities LLC. The Honorable Judge Sands of the U.S. District Court for the Southern District of New York issued the decision on October 20, 2010, dismissing the second amended class action complaint in its entirety. Judge Sands ruled that FM Low Volatility Fund, Family Management Corporation, and its top executives did not willfully ignore “red flags” in order to obtain investment fees. Newman et al., v Family Management Corp. et al, 1:08-cv-11215.
Ilona Meszaros v. Axial International Limited and Saul Marks, 111897/09
Plaintiff, represented by Lax & Neville, was granted summary judgment against Defendant Axial International Limited on the issue of liability in a case for breach of a consignment agreement regarding Plaintiff's engagement ring. After a framed issue hearing on damages, the Honorable Judge Solomon in the Supreme Court of the State of New York entered Judgment against Defendant Axial International Limited on May 20, 2011.
Plaintiff, represented by Lax & Neville, successfully won an appeal determining that Plaintiff’s claims of malicious prosecution were not time barred.
Claimants’ allegations of unauthorized trading, failure to execute, and negligence against Respondents were dismissed in their entirety. Respondent Shere was represented by Lax & Neville.
On June 5, 2009, Lax & Neville filed a class action adversarial proceeding in the United States Bankruptcy Court for the Southern District of New York seeking to obtain a declaratory judgment, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. 2201, et seq., (i) that the Trustee's definition of "net equity" is incorrect as a matter of law, and (ii) that a customer's "net equity" under SIPA is the value of the securities reflected in the customer's Madoff account as of the SIPA filing date (even where the securities were never actually purchased) less any amounts the customer owes to Madoff. On June 16, 2010, the Second Circuit accepted the direct appeal of the net equity issue.
Defendants' motion to dismiss grafted and Plaintiff's motion to compel arbitration denied based on lack of personal jurisdiction over Defendant since Defendant did not receive invoices containing an arbitration provision until after litigation commenced. Defendant was represented by Lax & Neville.
Delaura, represented by Lax & Neville, successfully arbitrated Delaura’s claims for wrongful termination and abuse of the Form U-5 and the FINRA Arbitration Panel ordered Citigroup to amend the language contained on Delaura’s Form U-5.
Claimant awarded $128,000 and costs against Merrill Lynch and the registered representative after Lax & Neville successfully arbitrated causes of action including unsuitable investment recommendations, violations of Self-Regulatory Organization Rules, breach of fiduciary duty, violation of the Securities Exchange act and failure to supervise regarding the sale of proprietary products by Respondent in Claimant's fee based account.
In a qui tam and retaliatory discharge action under the federal False Claims Act by a terminated executive of a federally funded social service agency, Lax & Neville, successfully opposed the defendant agency's summary judgment motion.
Westminster Securities Corp. and John O'Shea vs. HQ Sustainable Maritime Industries, Inc.
AAA No. 13 199 Y 00334 06
Respondent, a Chinese export company, was ordered to pay $528,234.00 to Westminster Securities Corp., an investment bank represented by Lax & Neville, pursuant to an operative placement agent agreement, as well as reprice HQ Sustainable Maritime Industry warrants owed to John O'Shea.
Mintz & Gold, LLP v. Zimmerman, 102758/07: Decided March 30, 2010
Defendant's motion to dismiss was denied pursuant to Civil Rights Law § 70 since Plaintiff, represented by Barry R. Lax, established that Defendant maliciously and vexatiously commenced a subsequent action after the New York Appellate Division stayed the initial proceeding to compel arbitration.
In a JAMS arbitration, Claimant, represented by Barry R. Lax, was awarded $1.2 million in unpaid bonuses inclusive of interest and attorneys' fees from DEPFA Bank, plc.
McMahan Securities, Co. L.P. vs. Michael Shillan
Shillan, who was represented by Brian J. Neville, wins $250,000 from his employer, McMahan Securities, Co. L.P., for violations of employment contract law and Florida's Labor Law.
Paul Fitzgerald v. Fahnestock & Co., Inc. and Oppenheimer & Co., Inc.
NYSE No. 2004-015875
Claimant, a former employee of Respondent, through the representation of Barry R. Lax, was awarded $436,000.00 based upon violations of New York Labor Law for Respondent's failure to pay Claimant wages and severance upon his termination.
Arbitration Panel ordered all references to the customer complaint at issue expunged from Claimant's Form U-5. Claimant was represented by Brian J. Neville.
Claimants received $150,294 from Securities of America, Inc., and others, based upon its violation of various federal securities laws including 15 U.S.C. §78(j)(b) and Rule 10b-5 and violations of NASD Rules of Fair Practice and NYSE Rules. Claimants were represented by Brian J. Neville.
Gary Farber v. SunTrust Banks, Inc., et.al.
NYSE No. 2004-015608
Claimant, represented by Barry R. Lax, was awarded $130,000 for Sun Trust's breach of employment agreement, deprivation of severance pay and violation of New York Labor Law.
Lucille Banahan v. Wachovia Securities, Inc.
NASD No: 04-01979
Claimant, represented by Brian J. Neville in Florida, was awarded $135,000.00 for Wachovia Securities's unsuitable recommendations, breach of duty of care, fraud and negligent misrepresentation, violation of federal securities laws and industry rules, failure to supervise and respondeat superior regarding Claimant's investments in annuities, mutual funds and individual stocks.
Claimant, represented by Brian J. Neville, was awarded $325,000.00 based upon Respondents' unsuitable recommendations, fraud, misrepresentations, and various violations of federal securities laws.
Claimants, represented by Brian J. Neville, won $116,665.00 from the registered representative for unsuitable recommendations, violation of Section 10(b) of the Securities Exchange Act of 1934, violation of industry rules, and violation of Florida Securities Statutes.
George C. Grivas v. Kerry J. Dukes, et.al.
NASD No. 00-02709
Claimant, represented by Barry R. Lax, awarded $125,000.00 for Respondents violation of Virginia Securities Act, breach of contract, failure to supervise, control person liability and respondeat superior.
Stanley & Laja Shtupak v. JWGenesis Securities, Inc., et al.
NYSE No. 2001-008968
Genesis Securities was liable to Claimants, who were represented by Barry R. Lax, for $45,656.00 for unauthorized and unsuitable trading, and churning, in Claimants margin account.