FINRA Award of Nearly 100%
FINRA Award of nearly 100% of excessive fees awarded back to investors, plus statutory interest, costs, and attorney fees. We represented a family, including an elderly couple in their 80’s, that trusted their retirement savings with a local broker and his solo brokerage firm. The broker engaged in frequent buying and selling of individual stocks in the accounts, which earned him a hundreds of thousands of dollars in commissions but otherwise did not benefit (and actually harmed) the performance of the accounts. The cost/equity ratio of the accounts was as high as 17.5%, which means that the account had to realize trading profits of 17.5% just to avoid losing money. The broker had been charging commissions hundreds of thousands of dollars higher than if he had charged a flat 2% management fee of the accounts. After a four-day arbitration hearing, the FINRA arbitration panel found unanimously that the broker’s frequent trading of securities in the accounts were excessive in light of the investment objectives and risk tolerance of the various family accounts, and his investment strategy of aggressive trading in individual stocks was unsuitable. The panel awarded our clients nearly 100% of the excessive fees that we had requested be returned to them, and also awarded them interest, costs, expert witness fees, and our attorney fees. The broker tried to vacate the arbitration award, and we won before the Oregon trial court that the award should not be vacated. The broker then appealed that decision to the Oregon Court of Appeals. We again argued for our clients that the award should stand, and the Court of Appeals agreed in 2018 and affirmed the lower court’s decision.