Case Summaries

Award Summaries Chronologically

Securities attorney Jeffrey Feldman has never lost an NASD arbitration. While the great majority of such cases settle, the awards referenced below were all rendered after contested NASD arbitration hearings. Several of Mr. Feldman’s cases have settled after an arbitration hearing has already begun, but most settle well prior to a hearing commencing, sometimes before an arbitration proceeding is even filed. This can be accomplished through mediation or direct settlement negotiations.

Zimmerman v. Prudential Securities, NASD Case No. 99-01315 : This was both a suitability case and a product case, where the claimants, an elderly couple were sold a very risky stock called Criimi Mae, which was marketed as a safe place to put your money. You may have noticed that this stock sounds an awful lot like Ginnie Mae, the acronym for the Government National Mortgage Association, which is a government-owned corporation which issues mortgage-backed securities that offer the full faith and credit guaranty of the United States government. These securities are known as Ginnie Maes. Unfortunately for my clients, the 25% of their limited net worth which went into this stock, based on their broker’s recommendation, was going into a highly risky security that used incredible leverage to trade in derivatives and other very risky securities that were anything but guaranteed by the United States government. Criimi Mae, because it was being marketed as a Ginnie Mae substitute, made this a product case for my clients. Because my clients were retired elderly people who were sold an overly concentrated position of this investment, this was also very much a suitability/concentration case. Needless to say, my clients lost almost everything in their Criimi Mae investment. A Ginnie Mae it was not! My clients recovered everything they lost on this investment, plus interest going back to the date of the investment.

Fidelity Brokerage Services, Inc. v. Eustis and Jones, NASD Case No. 00-05178 : This was an execution case where Fidelity had actually brought an arbitration against my clients to recover a net debit balance – an amount Fidelity claimed that my clients owed Fidelity because after everything was liquidated in their account, money was still owed to Fidelity. We brought a counterclaim against Fidelity, claiming that Fidelity erroneously executed trades in my clients’ account. Fidelity lost its claims and my clients won on their counterclaim everything they sought.

Becker v. Hampton Porter et al., NASD Case No. 01-02533 : This was a case where the respondents perpetrated a fraud on my clients. In the industry, this type of fraud is known as a “pump and dump,” where the brokers pump up a worthless stock’s share price by getting unsuspecting investors to purchase it. Then, when the share price goes up, the perpetrators, including the principals of the brokerage firm in this case, dump their shares at the higher prices, just before the stock collapses and the victims lose everything. These types of cases can result in substantial punitive damages, which happened in this case against most of the respondents.

Lopez et al. v. Merrill Lynch, NASD Case No. 02-04422 : This case resulted in the second highest consumer NASD award in the country in 2004, or just under $6.4 million. This was more than twice as much as was originally sought in the arbitration filing and several times the claimants’ out-of-pocket damages. Mr. Feldman represented four claimants in this matter who sought advice from respondents on how to exercise their employee stock options. Because of the allegedly poor advice they received, three of the four claimants ended up with net debit balances in their accounts, or owing Merrill Lynch money after their accounts were liquidated.

Dutt v. Shelman Securities et al., NASD Case No. 03-02913 : This churning case resulted in a $311,572 award against all three respondents. It was clear that an inexperienced investor was taken advantage of so that respondents could profit at the claimant’s expense.

Mahaney v. Fahnestock, NASD Case No. 03-07651 : This was really a classic churning case, where the claimant alleged, among other things, that the respondents traded so much that it could only really benefit the respondents, and not the claimant. Even though the claimant in this case was relatively sophisticated, the panel in this case made it clear that brokers cannot take advantage of people.

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