In a Financial Industry Regulatory Authority ("FINRA" ) Arbitration Statement of Claim filed in December 2008, and thereafter amended in June 2009, Claimants asserted 15 causes of actions against various combinations of seven named Respondents. Among those allegations were breach of fiduciary duty, breach of contract, fraud, unauthorized trading, and negligent supervision. The claims arose within the context of Respondents' alleged illegal seizure and theft of 1,260,000 shares of Duke Realty Corporation ("DRE") common stock from Claimants' accounts. DRE is a United States based real estate investment trust (REIT) .
In the Statement of Claim, Claimants initially sought $300 Million in compensatory damages plus $900 Million in treble damages as provided under Florida's Civil Theft Statute; or, in the alternative, the return of the 1,260,000 DRE shares (with compensation for accrued dividends and interest thereon). Additionally, Claimants sought costs, expenses, attorneys' fees, and punitive damages of at least $50 Million. At the close of the FINRA Hearing, Claimant Staton Family Investments, Ltd sought $854,000 in taxes; $327,602 for losses arising from the sale of the DRE shares; $14,879,721 for lost dividends ; $4,500,000 for bond losses, and treble punitive damages.
In the Matter of the FINRA Arbitration Between Staton Family Investments, Ltd. And Daniel C. Staton, Claimants, vs. Merrill Lynch, Pierce, Fenner & Smith Inc., Merrill Lynch Bank USA, Merrill Lynch Bank & Trust Company FSB, Christopher Dale Jacobs, Margot M. Dwyer, James R. Dickson, Gerald Andres Schwinn, Jr., and The Jacobs Team, Respondents (FINRA Arbitration 08-04586, July 21, 2011).
Respondents Merrill Lynch Bank USA and Merrill Lynch Bank & Trust Company FSB are not FINRA members and declined to voluntarily submit to FINRA's jurisdiction.
Respondents generally denied the allegations and asserted various affirmative defenses. Additionally, Respondents Jacobs, Dickson, Dwyer, and Schwinn sought an expungement of this matter from their Central Registration Depository records ("CRD").
At the commencement of the FINRA hearing, the parties stipulated that Claimant Daniel C. Staton's claims had no basis and, accordingly, the Panel dismissed his claims with prejudice.
The FINRA Arbitration Panel found Respondents Merrill Lynch, Pierce, Fenner & Smith Inc., Merrill Lynch Bank USA, and Merrill Lynch Bank & Trust Company FSB jointly and severally liable to Claimant Staton Family Investment, Ltd for $8.1 Million in compensatory damages as a result of breach of fiduciary duty.
The claims against Respondents Jacobs, Dickson, Dwyer, Schwinn and the Jacobs Team were denied.
Respondents Jacobs, Dickson, Dwyer and Schwinn's request for expungement of their CRD was denied.
Disclosure: Claimants were represented by Martin Russo, Esq., one of my law partners at Gusrae, Kaplan, Bruno & Nusbaum PLLC. As such, I have declined to offer additional commentary beyond the recitation of the claims and decision.