Michael J. Betts LLC Client Wins $500,000 FINRA Arbitration Award

Michael J. Betts LLC

On February 18, 2020, following a three-day hearing in Pittsburgh, a FINRA arbitration panel issued an award in favor of a client represented by Michael J. Betts LLC, ordering a brokerage firm and a financial advisor to pay damages in the amount of $500,000. The claims arose from numerous unauthorized covered call trades made in the account, as well as the respondents’ failure to properly diversify the account, unauthorized investments into unsuitable securities and the brokerage firm’s failures to supervise the financial advisor’s handling of the account. The award is significant because the arbitrators’ award represented an award of “well managed portfolio” damages, which reflect the difference between the value the account would have had if it had been properly invested and the actual value of the account after having been mishandled. Respondents in FINRA customer arbitrations often argue, as the respondents in this case did, that a claimant’s damages should be limited to “net out-of-pocket” losses, i.e., the difference between the amount of funds invested into the account and the value of the account when closed.

Posted in: ADR

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