NYSE Awards 02/03 From the Securities Law Home Page


]]> Home | Message Board Home Search Arbitration Investors Brokers Finance Law Compliance Archives NYSE Awards of Note – 02/03
ML Media Cases, Broker Cross Claims against Settling BD and more


24 of the 28 Awards issued by the Exchange in this monthly period were customer-related, with the ML Media Awards comprising about half of the Awards on the customer side. The “ML Media” Awards are those which relate to a limited partnership investment, ML Media Opportunity Partners, LP, and a dispute between investors in that partnership and Merrill Lynch concerning alleged misrepresentations. The misrepresentations deal with ML Media’s stated intention to diversify its investments within set parameters and charges that it exceeded specified concentration percentages. Single Arbitrators have been appointed to hear the cases, which are presented independently of one another, but without hearings. Much of the time, the same attorneys appear on each side, and, evidently, there is agreement that the amounts claimed can exceed the Small Claims jurisdictional amount, as can the amounts awarded.

Despite this standardized approach, each Arbitrator is taking his or her own perspective on the case at hand, so that the results reached have run the gamut. Generally speaking, though, Merrill Lynch has defeated a majority of the claims and this month’s lot was no exception. Investors won damages in four of the 11 Awards.

Perhaps the largest award to a customer in the February group of Awards occurred in Kusmierski & Singer v. Josephthal & Co., Inc., NYSE ID #2002-010590 (New York, 2/6/03), where the “say-nothing” Award described the clients’ claims as “breach of contract, negligent misrepresentation and omissions, unauthorized trading, unsuitability, negligence, breach of fiduciary duty….” The Award directs payment by all Respondents of $300,000 on a $400,000 compensatory claim. Claimants were represented by Christine M. Bae and Carlton R. Asher, NYC.

Newfield v. Dain Rauscher, NYSE ID #2001-009522 (New York, 2/7/03), drew our interest, because the $225,000 award to a customer on charges crisply described only as “unsuitable investment and churning” reveals a divided defense. The awarded amount, which compares with $2.2 million in claimed damages, will be the sole responsibility of the broker. The firm settled, evidently during the proceeding, and broker Todd Cowle filed a cross-claim to keep Dain Rauscher in the case. The Arbitrators ruled on the cross-claim, but denied it in full. The Award does not indicate who was assessed with the $12,500 in forum fees.

Finally, both sides won something in an industry dispute in which Prudential Securities claimed amounts due on a promissory note and Shane Mahieu responded with charges of “constructive termination.” Prudential Securities, Inc. v. Mahieu v. Bobo & Bell, NYSE ID #2002-010253 (New York, 2/20/03). The “Award Data” section of the Award incorrectly double-counts the $25,000 award to Mr. Mahieu, but the “Decision” section clarifies that Prudential won its full claim on the note, but was directed to credit Mr. Mahieu with an offset of $25,000.



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Copyright 2003 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to help@sacarbitration.com. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at www.sacarbitration.com

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article. 

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Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | mja@sallahlaw.com | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.