Below are just a few examples of cases that improved the lives of our clients, and helped improve the law for investors everywhere.
Every case is different. We take the time to explain the legal process, your options, and we are not afraid of trying your case in FINRA arbitration or court. The SYK Investor Defenders team is committed to listening to the needs of our clients and achieving the best possible outcome.
Unto Infinity, INC. v. Schwabe Williamson & Wyatt, P.C.
$10 Million Settlement. We represented a non-profit religious corporation that had lost its multi-million international tea and cereal business after a lawyer assisted certain individuals to secretly purchase the highly profitable business at a small fraction of its actual value by structuring a complex transaction that was never fully explained to our clients. We sued the law firm that structured the unfair transaction. The case was settled and our clients received $10 million in the settlement.
Group of Investors and Real Estate Limited Partnership (LP) Investments
Confidential Settlement. We represented a group of 16 clients, all of whom had purchased investments in one of two private limited partnership real estate transactions. The total losses were more than $1.7 million. We filed the case in Circuit Court in Portland, Oregon. We sued the real estate developer who ran the partnerships, and the New York law firm that prepared the confidential private placement memoranda that were used to sell the investments. After more than 15 depositions and countless motions filed against our case, we ultimately settled the case for an amount that our clients agreed to accept and that the defendants require us to keep as confidential. Years after the end of that case, we still receive emails from those clients thanking us for our efforts.
AT&T Employee Accepting Early Retirement – FINRA Expungement Law
Confidential Settlement and Change to FINRA Expungement Rules. We represented an AT&T employee who was given an option to take early retirement. She was advised by a financial adviser to take early retirement, sell her AT&T sponsored 401k investments, and purchase non-traded REITS and variable annuities, which we felt were grossly unsuitable. The case was settled before hearing. The advisor then filed a motion to expunge (erase) any record of the claim we had filed. Expungements of customer complaints and cases from a broker’s CRD record are not supposed to be granted except in extraordinary circumstances. Why? Because having such information publicly available about a broker is an important tool for protecting investors from possible bad actors in the financial industry. Our client agreed with us that we should oppose the expungement motion, which we did on a pro bono basis. The arbitration panel refused to let our client give testimony during the expungement hearing, and refused to allow us to cross-examine the advisor after she was allowed to give unsworn testimony to the panel. The panel granted the expungement, saying, falsely, that the parties had an opportunity to present their cases. The denial of due process in this case resulted in a featured article in the New York Times on September 26, 2014.
FINRA agreed with us that the expungement hearing was improperly conducted, and sent an announcement to all FINRA arbitrators instructing them to allow an investor’s lawyer to examine and cross-examine witnesses in an expungement hearing. FINRA updated its rule guidance so that it was more clear what arbitrator should and should not allow in a FINRA expungement hearing. Ultimately, the Court of Appeals for the State of California agreed with us that the expungement hearing was improperly conducted, that our client’s rights were substantially prejudiced and affirmed the lower court’s decision to vacate expungement award. We are proud to have been part of a proceeding that has undoubtedly made the FINRA arbitration expungement process more fair.
Group of Investors and Promissory Note Investment
Confidential Settlement after Mediation. Our clients were sold risky, unsuitable, subordinated promissory note investments in business entities that had been represented as providing safe and secure fixed income. In fact, the exact opposite was true, and when the business entities stopped paying investors on the promissory notes our clients stood to lose nearly all of their respective six-figure investments. We filed a FINRA arbitration case on their behalf in Arizona against the dual-licensed broker / registered investment advisor who sold the notes, his brokerage firm, the control persons of the brokerage firm, and the advisor’s registered investment advisory firm. We eventually went to mediation and negotiated a successful confidential settlement.
Elderly Client and Overconcentration in Energy Sector Equities
Confidential Settlement for over 96% of alleged damages. The broker in this case seemed to treat all of his clients the same, regardless of age, investment objectives, or individual risk tolerance. We represented a large group of investors with similar overconcentration of energy sector equities in their accounts and filed claims on their behalf against the broker, but one investor in particular stood out as a particularly egregious case. Our 90+ year old client entrusted her life savings with the broker, who put her into 99.9% stocks that were heavily concentrated in risky energy sector investments. Her account had six-figure losses in a short amount of time. We quickly reached a confidential settlement with the broker and his firm for nearly all of what our FINRA complaint asked for – a huge victory for our client who otherwise would have lost most of her retirement savings.
Family of Investors Harmed by Broker “Churning” Accounts – FINRA Case and Successful Defense of Broker’s Appeal
FINRA Award of nearly 100% of excessive fees awarded back to investors, plus statutory interest, costs, and attorney fees. We represented a family, including an elderly couple in their 80’s, that trusted their retirement savings with a local broker and his solo brokerage firm. The broker engaged in frequent buying and selling of individual stocks in the accounts, which earned him a hundreds of thousands of dollars in commissions but otherwise did not benefit (and actually harmed) the performance of the accounts. The cost/equity ratio of the accounts was as high as 17.5%, which means that the account had to realize trading profits of 17.5% just to avoid losing money. The broker had been charging commissions hundreds of thousands of dollars higher than if he had charged a flat 2% management fee of the accounts.
After a four-day arbitration hearing, the FINRA arbitration panel found unanimously that the broker’s frequent trading of securities in the accounts were excessive in light of the investment objectives and risk tolerance of the various family accounts, and his investment strategy of aggressive trading in individual stocks was unsuitable. The panel awarded our clients nearly 100% of the excessive fees that we had requested be returned to them, and also awarded them interest, costs, expert witness fees, and our attorney fees. The broker tried to vacate the arbitration award, and we won before the Oregon trial court that the award should not be vacated. The broker then appealed that decision to the Oregon Court of Appeals. We again argued for our clients that the award should stand, and the Court of Appeals agreed in 2018 and affirmed the lower court’s decision.
Portfolio Mismanagement – Lack of Diversification and Asset Allocation
Confidential Settlement. We represented a client regarding investments purchased for her revocable trust’s investment account at a major national brokerage firm. Our client relied on her financial advisor’s recommendations and trusted that he would be monitoring her account and make suitable recommendations for her retirement needs. After recovering from a serious health issue, our client discovered that her advisor used his discretionary trading authority to reduce her revocable trust’s account to just a handful of single equity stocks, heavily concentrated in the energy sector. In just a short period of time her account lost nearly $200,000 due to the risky lack of diversification. We filed a FINRA case on her behalf claiming breach of fiduciary duty, negligence, failure to supervise, and violation of the Oregon Securities Laws for the mismanagement of the account. We negotiated a confidential settlement for our client, and she was able to recover a significant amount of her retirement savings and move on with her life.