Defended financial firm and officers in NASD arbitration relating to broker misconduct
We defended a financial firm and two of its officers in NASD arbitration arising out of misconduct from a former principal of the firm. The former principal systematically stole millions of dollars from customers by intercepting customer funds, changing customer addresses and falsifying account statement. After the Securities Investor Protection Corporation initiated liquidation proceedings against our client, the claimants moved to assert claims against two officers of the firm based on common law theories of liability. We moved to dismiss the claims in NASD arbitration, and the arbitration panel ordered dismissal of the federal securities fraud claims. The only claims that remained against our clients were allegations of negligent supervision, negligent hiring, breach of fiduciary duty and liability based upon the respondeat superior. Over a period of two weeks, the matter was heard before a panel of three arbitrators and we received a judgment granted in favor of one of the officers. The other officer agreed to a minimal settlement after rejecting a six-figure settlement prior to the hearing.