In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2009, Claimant US Airways asserted, among other causes of action, breach of contract, unsuitability, fraud, negligence, and failure to supervise in connection with certain structured, private placement auction rate securities. As set forth in the FINRA Arbitration Decision, Claimant sought the following:
A) an order declaring that Respondents mismanaged Claimant's accounts and violated investment objectives and compelling Respondents to purchase from Claimant all currently illiquid securities, amounting to $253,100,000.00, at par plus accrued interest; or
B) in the alternative, an order rescinding the purchase of the currently illiquid securities; and
C) damages in an amount to be determined at arbitration, punitive damages of triple the damages suffered for a total of $759,300,000.00, interest, reasonable attorneys' fees, costs, and such other relief as is just, fair, and equitable.
At the hearing. Claimant requested compensatory damages in the amount of $110,390,000.00, $26,460,000.00 in pre-judgment interest, and attorneys' fees.
In the Matter of the FINRA Arbitration Between US Airways, Inc., Claimant, vs. Oppenheimer & Co.,Inc. and Vincent Woo, Respondents, vs.Deutsche Bank Securities, Inc. and Deutsche Bank AG, Third Party Respondents (FINRA Arbitration 09-00878, January 31, 2013).
Respondents Oppenheimer and Woo generally denied the allegations and asserted various affirmative defenses. Respondent Oppenheimer filed a Third-Party Statement of Claim, which alleged among other causes of action, breach of settlement agreement, fraudulent and negligent misrepresentation, and unjust enrichment.
Respondent Oppenheimer requested $8,025,887.00 in fees and $1,007,986.00 in costs. In its Third-Party Statement of Claim, Respondent Oppenheimer requested the following as stated in the FINRA Arbitration Decision:
A) an order declaring that Oppenheimer properly and reasonably relied upon the representations made by Deutsche Bank Securities and Deutsche Bank AG, the "AAA" ratings given by Fitch Ratings and Standard and Poor's Rating Services, and the integrity of the Dutch auction process;
B) an order declaring that, to the extent there were any misrepresentations or omissions of material facts, the misrepresentations were made by Deutsche Bank Securities and Deutsche Bank AG and not Oppenheimer;
C) an order declaring that Deutsche Bank Securities and Deutsche Bank AG are jointly and severally liable to Oppenheimer for any amount awarded against Oppenheimer, including pre- and post-judgment interest; and
D) attorneys' fees and costs incurred in defense of Claimant's Statement of Claim and bringing the Third-Party Claim.
Third-Party Respondent Deutsche Bank AG did not enter an appearance in this matter or submit anAnswer. Deutsche Bank AG is not a member or associated person of FINRA and did not voluntarily submit to arbitration; therefore, the Panel made no determination with respect to Claimant's claims against Deutsche Bank AG.
Third-Party Respondent Deutsche Bank Securities generally denied the allegations and asserted various affirmative defenses.
On October 2, 2009, Deutsche Bank Securities filed a Motion to Sever, which the FINRA Arbitration Panel granted. Also, the Panel granted Respondents' Motion to Partially Dismiss with the modification that "the Panel believes that Claimant's obligation to mitigate any damages could and should have been fulfilled in the fall of 2007."
The FINRA Arbitration panel found Respondents Oppenheimer and Woo jointly and severally liable and ordered them to pay to Claimant US Airways $30,000,000 in compensatory damages but Respondent Woo's liability is not to exceed the dollar amount of his commissions generated by the Camber, Pivot, and Capstan transactions in Claimant's account (other than the commissions made from Camber series 1, 2, 3, 4 and 6, which are the Camber series that were redeemed).
I wish that I could offer you more details but as is all too often the case in these relatively sparsely written FINRA Decisions, what they stated is what I told you. Nonetheless, it's still quite breathtaking. Nearly $1 Billion in compensation sought and a still whopping $30 Million awarded.
As reported by "Street Sweeper" in " US Airways Lands $15 Million FINRA Auction Rate Securities Award" (June 2, 2011), In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in 2009, Claimant US Airways asserted various causes of actions including unsuitability, unauthorized purchases, negligence, and failure to supervise relating to its claims involving auction rate securities ("ARS").
In addition to other damages, attorneys' fees, and interest, Claimant requested $134.6 million compensatory damages for all illiquid securities in its account, plus punitive damages of $403.8 million. At the close of the FINRA arbitration hearing, Claimant requested up to $91,235 million in compensatory damages. In the Matter of the FINRA Arbitration Between US Airways, Inc., Claimant, v. Roland Hansalik, Lars Jacobson, George Barclay Perry, and Joseph Arena, Respondents (FINRA Arbitration 09-06905, May 27, 2011).
SIDE BAR: Claimant initially filed a Statement of Claim on or about December 11, 2009. Thereafter, Claimant filed an Amended Statement of Claim on or about December 23, 2009 replacing the original Statement of Claim. The original Statement of Claim was not served on the Respondents and not considered by the Panel. The claims appear to involve ARS purchases made when Respondents were registered with Lehman Brothers, but that is not stated in the FINRA Decision.
Respondents generally denied the allegations, asserted various affirmative defenses, and requested an expungement of the matter from their Central Registration Depository ("CRD") records.
The FINRA Arbitration Panel found Respondents Hansalik, Perry, and Arena jointly and severally liable and ordered them to pay to Claimant $15,000,000.00 in damages.
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