Elderly Investor Recovers Losses Tied to UIT
After a four day hearing, a panel of FINRA arbitrators awarded $130,000.00 in compensatory damages to our clients. The damages were for losses incurred by an elderly woman with Alzheimer’s disease whose funds were invested primarily in high-risk securities, including a Claymore Unit Investment Trust (“UIT”).
Profit sharing plan recovery for losses on RMK Bond Funds (FINRA, 2010)
Brian Smiley and Mike Bishop, along with co-counsel, represented the pension plan for a medical practice. The plan’s losses arose from investments solicited in three Regions Morgan Keegan Bond Funds (RMK High Income, RMK Strategic Income, and RMK Multi-Sector Funds). These funds took incredible risks with shareholders’ money by owning low level tranches of mortgage and asset-backed securities and collateralized debt obligations. Morgan Keegan defended the case aggressively and even sought recovery of its attorneys’ fees. The arbitration panel ruled in favor of the claimant, specifically finding Morgan Keegan liable for fraud, breach of fiduciary duty, and violation of the Tennessee Consumer Protection Act. It awarded compensatory damages of $301,195, interest of $14,060, attorneys’ fees (including for discovery abuse) of $115,689, plus costs of $52,413.
Recovery for losses in RMK Bond Fund (FINRA, 2009)
Brian Smiley, Mike Bishop, and our co-counsel obtained an award of full compensatory damages, attorneys’ fees, plus costs for two clients. The claim related to Regions Morgan Keegan’s Select Intermediate Bond Fund. In defending the case, Morgan Keegan used two expert witnesses, including a former chair of the U.S. Commodity Futures Trading Commission.
Successful defense of third-party claim brought by brokerage firm (FINRA, 2008)
This was an unusual case in which we represented a widow who was sued by a brokerage firm on a third party claim for indemnification. After a hotly contested hearing that spilled over into court proceedings, the arbitrators entered an award in favor of our client—the third party defendant.
Retiree awarded losses plus $284,908 attorneys’ fees, costs and $400,000 in punitive damages (NYSE, 2003)
Brian Smiley was one of the counsel for a former Proctor & Gamble factory worker who contended that he had been defrauded by employees of the A.G. Edwards’ brokerage firm. A panel of NYSE appointed arbitrators awarded Mr. Gresham actual damages of $284,908, attorneys’ fees of $239,717, costs of $25,000, and punitive damages of $400,000. Mr. Smiley’s role in the hearing included examination of the claimant’s expert witness, and cross examination of A.G. Edwards’ National Director of Compliance, which was presented to demonstrate the violations of securities industry rules and supervisory failures that allowed the violations to occur. Subsequent to the award, Mr. Smiley has written and lectured extensively on financial frauds against baby boomers who are entering their retirement years.
Retiree who bought variable annuity in IRA granted recovery of losses, attorneys’ fees and costs (NASD, 2003)
BellSouth retiree Gwen Sims was convinced by a financial planner, who conducted a retirement planning class she attended at a local university, to invest her pension assets in a variable annuity. Brian Smiley convinced a panel of NASD arbitrators to grant her an award of her losses, plus attorneys’ fees and costs. Evidence in the case established that the investment was unsuitable for a retiree’s rollover IRA. It was also established that the insurance company which issued the variable annuity was the parent of both the broker-dealer firm which sold it as well as the company which conducted the seminar. The seminar course book was notable for its subtle effort to paint variable annuities in the most favorable light, while largely overlooking their many flaws such as high costs, commissions, and the likelihood of losing money in declining markets.
Ms. Sims’ victory in the case and the perils of purchasing variable annuities in retirement accounts were the subject of an article in the Communications Workers of America magazine, CWA News, “CWA Retiree’s Investment Nightmare; A Cautionary Tale for Retirees Taking Lump Sum Pensions.”
Former NFL star awarded over $342,000 for investment scam (NASD, 1998)
Brian Smiley and Mike Bishop represented Larry Roberts, a retired defensive end from the San Francisco 49ers. Mr. Roberts contended that his broker at Dean Witter misled him into investing $140,000 in a company which allegedly developed, renovated, and sold homes through a HUD program. The investment quickly failed, and it was determined that the investment was not guaranteed as represented. Mr. Roberts brought claims against Dean Witter and its broker (Brian Smith) for violations of Georgia securities laws, breach of fiduciary duty, fraud, and violation of securities industry rules. A panel of NASD appointed arbitrators ruled in favor of Mr. Roberts and awarded him $242,143 in compensatory damages, including interest. In addition, the broker was held liable for $100,000 in punitive damages. The case was featured in a front page article in the Wall Street Journal (January 27, 1999), “Old NFL Man Trusts His Money to Another, But Soon Regrets It – Investment at Dean Witter Vanishes, and the Broker Washes His Hands of It.”
Small business owner awarded $651,201 for losses, $329,664 in attorneys’ fees, and $1,000,000 in punitive damages (NASD, 1997)
The firm’s client was a small business owner from Louisiana who alleged that his stockbroker fraudulently induced him to invest in two private companies. After the client lost his entire investment in both companies, Brian Smiley represented Mr. Dobison in an arbitration claim against the stockbroker and his brokerage firm. The client contended that the individual broker and his firm were liable for negligence, fraud, conversion, breach of fiduciary duty, and the sale of unregistered securities. The brokerage firm contended that it was not liable because the broker had not made it aware of the transactions and did not place the investments through the firm. A hearing panel of the NASD entered an award on behalf of the client in the amount of approximately $2,000,000. More specifically, the panel ordered both the firm and the broker to pay Mr. Dobison $651,201 for his losses, plus $329,664 for attorneys’ fees and costs. In addition, the panel ordered the broker to pay another $1,000,000 in punitive damages. The award drew national attention, including a Wall Street Journal article (March 13, 1997), “Josephthal Lyon and a Former Broker Are Ordered to Pay Almost $2 Million.”
Defective fairness opinion favoring merger results in $4,250,000 NYSE award for shareholders (NYSE, 1994)
Partners of the firm won an award of approximately $5,000,000 for several doctors who claimed that a major investment banking firm issued a misleading “fairness opinion” in connection with the merger of two medical companies, one of whose shares the doctors owned. The investment banking firm rendered a formal opinion that the proposed merger was fair to shareholders, including the doctors who were represented by Page Gard Smiley & Bishop. However, immediately following the merger, the price of the resulting company’s stock dropped by 50% on news that operating results would be much lower than projected. The claimants in this NYSE arbitration contended that the investment bankers violated Section 11 of the Securities Act of 1933 by failing to disclose information about the anticipated revenue shortfall and its probable impact on the merged company’s share price. The NYSE arbitration award, the first of its kind, drew immediate attention in the investment banking community and was the subject of an article in the August 25, 1995 Wall Street Journal, “Big Board Panel Orders CS First Boston To Pay $5 Million Over Fairness Report.” In their award, a panel of New York Stock Exchange arbitrators ordered First Boston to pay damages of $4,474,197, as well as $500,000 in attorneys’ fees and costs.
Successful recoveries for hundred of Prudential clients sold mismarketed limited partnerships
Attorneys from the firm represented more than 700 investors pursuing limited partnership claims against Prudential and recovered in excess of $40,000,000 on behalf of those investors.
Several of the more noteworthy cases were:
- J. Don Smith v. Prudential Securities (1993): Mike Bishop and co-counsel succeeded in obtaining a $2,875,000 settlement for a furniture executive who had invested approximately $1,100,000 in Prudential limited partnerships.
- Virginia First Savings & Loan v. Prudential Securities (1994): Mike Bishop and co-counsel obtained an arbitrator’s award of $1,750,000 on behalf of a savings and loan association which had lost money in a Prudential limited partnership formed to purchase commercial mortgages.