Lax & Neville LLP Wins Arbitration Award Against Investment Advisory Firm SICA Wealth Management and Investment Advisor Jeffrey Sica For Breach Of Fiduciary Duty
On April 28, 2015, Lax & Neville LLP won an arbitration award on behalf of its client, an elderly widow, before the American Arbitration Association (“AAA”), against an investment advisory firm, SICA Wealth Management, and its principal, Jeffrey Sica. Lax & Neville LLP successfully argued that SICA Wealth Management and Jeffrey Sica owed their client a fiduciary duty and breached that duty by implementing an alternative investment strategy that was invested primarily in exchange-traded funds (“ETFs”), short and ultra-short ETFs, and short and ultra-short foreign currency trades.
The sole-arbitrator presiding over the AAA arbitration rendered an arbitration award which stated that SICA Wealth Management and Jeffrey Sica breached the fiduciary duty owed to their client by failing to adjust the alternative investment strategy to meet the investment objectives and risk tolerance of the client. Specifically, the award stated:
“[SICA Wealth Management and Jeffrey Sica] as registered investment advisors, each were fiduciaries to [the client]. Under the Investment Advis[e]rs Act, investment advisors must always act in their clients’ best interests and owe a fiduciary duty to their clients. An investment advisor must know the client’s suitability, objectives, time horizon and risk tolerance, limit speculative or aggressive recommendations based on information from the client and not in any way mislead a client. Starting in early 2012, [SICA Wealth Management and Jeffrey Sica] received direct communications from [the client] indicating she was anxious, scared, confused, continually experiencing sleepless nights and that she could not afford to lose any more money. Such communications required [SICA Wealth Management and Jeffrey Sachs], as fiduciaries, to act differently than they did. Merely providing assurances to be patient, that she will sleep well again, that they are confident their strategy would work, that she will be able to cover her monthly expenses over time and make her losses back, and that they have never lost money and this will not be the first time, did not fulfill their fiduciary duty to [the client].”
The arbitrator awarded compensatory damages which represented a disgorgement of fees received by SICA Wealth Management and Jeffrey Sica, and ordered that SICA Wealth Management and Jeffrey Sica pay for the majority of AAA forum fees.
Our team at Lax & Neville LLP has significant experience representing investors in securities arbitrations involving complex financial products, such as ETFs. If you feel like your investment advisor is pursuing a strategy that you do not understand, contact our offices today at (212) 696-1999 and schedule a consultation.