Couple Awarded $331,000 in Compensatory Damages Following FINRA Arbitration

A Financial Industry Regulatory Authority (“FINRA”) arbitration panel has reportedly ordered a wealth management adviser to pay a couple $331,000 in compensatory damages for making unsuitable, high-risk investments.  In Arbitration Case No. 15-00443, the couple sought nearly $1.1 million for “breach of contract and breach of implied contract, violation of Rule 10(13)-5 of the Securities Exchange Act of 1934, negligence, common law fraud, breach of the standard and customs of the securities industry as evidenced by violation of FINRA rules and regulations, unsuitable trading, and negligent misrepresentation.”  According to the couple, the broker made misleading statements about the level of risk they were subjected to for certain direct private placement investments made on their behalf between 2006 and 2008.

Prior to issuing its arbitration award, the majority-public FINRA panel denied the financial adviser’s request to dismiss the action twice.  In addition to issuing the $331,000 award, the panel ruled that the couple was not entitled to recover punitive or other damages and denied the securities broker’s request for expungement.

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