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FINRA Orders Millions in Stockbroker Arbitration Rulings

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Washington, DCTwo recent FINRA (Financial Industry Regulatory Authority) stockbroker arbitration rulings have seen FINRA panels award millions of dollars to investors who complained about stockbroker fraud or unsuitable investments. One of the stockbroker arbitration complaints was decided against UBS, while the other was decided against Goldman Sachs.

One such FINRA arbitration, as reported by The Wall Street Journal (5/20/15), saw a FINRA panel award a Puerto Rican retiree $1 million. The retiree, Juan Burgos Rosado, alleged UBS brokers recommended closed-end bond funds, which were unsuitable for the 66-year-old investor who was not experienced in securities investments. Following his investment of more than $1 million in the closed-end bond funds, Burgos lost approximately $735,000 from the investments.

Rosado alleges in his FINRA documents that when he initially expressed concern about losses in the funds, he was reassured by UBS and told to hold on to his investments, with his broker telling him that if she had money she would be invested in the same funds. When he filed the arbitration, he sought $2 million, but is reportedly happy with the panel’s award.

UBS has reportedly said it disagrees with the decision. The FINRA panel, as quoted by The Wall Street Journal (5/11/15), called Rosado’s account “grossly overconcentrated” and noted that a review of the account should have uncovered its unsuitability.

Meanwhile, FINRA also awarded $100 million to National Australia Bank, following an arbitration filed against Goldman Sachs & Co. According to reports, Goldman will pay for $80 million in losses experienced by National Australia Bank, which reportedly invested in Hudson Mezzanine Funding 2006-1 (also known as Hudson Mezz).

National Australia Bank alleged Goldman Sachs gave “knowing and material omissions and misstatements” in its Hudson Mezzanine marketing materials. The FINRA panel agreed with National Australia Bank that there were important omissions and misstatements in its marketing materials and that National Australia Bank relied on those marketing materials when it decided to invest.

As a result, the FINRA panel awarded National Australia Bank its $80 million investment and $20 million in interest.

Investors who have been misled into buying investments based on false claims or the omission of material information - or those whose accounts are overconcentrated in one type of investment - can file an arbitration against their broker to recover investments lost as a result of the broker’s actions.

The National Australia Bank claim is National Australia Bank Limited and TSL (USA) Inc. v. Goldman Sachs & Co, case number 12-04099, at the Financial Industry Regulatory Authority.

The Rosado Case is Juan Burgos Rosado vs. UBS Financial Services et al, case number 14-00170, at the Financial Industry Regulatory Authority.


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