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UPDATE 1-Bank of America loses arbitration to N.J. couple
Wed Apr 28, 2004 07:19 PM ET
By Jonathan Stempel
NEW YORK, April 28 (Reuters) - An arbitration panel ordered Bank of America Corp.'s (BAC.N: Quote, Profile, Research) securities arm to pay a New Jersey couple more than $820,000 because their broker failed to diversify their investments, leading to a big loss, people involved in the case said on Wednesday.
The April 20 award by a New York Stock Exchange arbitration panel to 45-year-old Robert Kadar and 51-year-old Denise Kadar of Edgewater, New Jersey, totals $625,000 plus 9 percent annual interest from Oct. 2000, the plaintiffs' lawyer, Stuart Meissner, said.
The Kadars said they lost $5 million because their Banc of America Securities broker, Richard Zinman, who worked with high-net worth clients, failed to diversify them out of a big stake in shares of Internet advertising firm DoubleClick Inc. (DCLK.O: Quote, Profile, Research), where Robert Kadar used to work.
These shares, which accounted for more than 90 percent of the Kadars' portfolio, fell roughly 80 percent from $97 when the Kadars opened their account in March 2000 to the teens when they were sold in late 2000.
"(Mr. Kadar) wanted advice on how to reduce risk and diversify," Meissner said in an interview. "The broker said you couldn't do that overnight, but in the end the broker didn't diversify my clients' holdings, and did not hedge or give advice on hedging at all."
Bank of America, which is based in Charlotte, North Carolina, had no immediate comment.
Zinman's lawyer, Peter Boutin, said in an interview: "Mr. Zinman did his business properly and conducted himself appropriately in this matter. There was significant evidence before the panel that the plaintiff was advised that he should be selling DoubleClick stock and diversify."
Zinman, who was not named as a defendant, now works at Citigroup Inc.'s (C.N: Quote, Profile, Research) Smith Barney unit, said Boutin, a partner at Keesal, Young & Logan in San Francisco.
Meissner said the Kadars' activities generated just $68 in commissions, as well as $16,000 in margin interest, for Banc of America Securities.
"It's significant that just because a firm doesn't earn a lot of money off a client doesn't mean it has no responsibilities toward that client," Meissner said. "If it makes representations to a client, it has to live up to them."
The Kadars moved their account to another brokerage in early 2001, Meissner said.
Copyright 2004, Reuters News Service
Banc of America ordered to pay N.J. couple $840,000, Forbes.com, April 28, 2004
Reuters, 04.28.04, 4:28 PM ET
By Jonathan Stempel
NEW YORK, April 28 (Reuters) - An arbitration panel ordered Bank of America Corp.'s (nyse: BAC - news - people) securities arm to pay a New Jersey couple more than $840,000 because their broker failed to diversify their investments, leading to a big loss, the plaintiffs' lawyer said.
The April 20 award by a New York Stock Exchange arbitration panel to 45-year-old Robert Kadar and 51-year-old Denise Kadar of Edgewater, New Jersey, totals $625,000 plus 9 percent annual interest from Oct. 2000, the lawyer, Stuart Meissner, said.
The Kadars said they lost $5 million because their Banc of America Securities broker, who works with high-net worth clients, failed to diversify them out of a big stake in shares of Internet advertising firm DoubleClick Inc. (nasdaq: - news - people), where Robert Kadar used to work.
These shares, which accounted for more than 90 percent of the Kadars' portfolio, fell roughly 80 percent from $97 when the Kadars opened their account in March 2000 to the teens when they were sold in late 2000.
"(Mr. Kadar) wanted advice on how to reduce risk and diversify," Meissner said in an interview. "The broker said you couldn't do that overnight, but in the end the broker didn't diversify my clients' holdings, and did not hedge or give advice on hedging at all."
Bank of America, which is based in Charlotte, North Carolina, had no immediate comment. The broker's lawyer did not immediately return a call seeking comment.
Meissner said the Kadars' activities generated just $68 in commissions, as well as $16,000 in margin interest, for Banc of America Securities. The broker was not named as a defendant.
"It's significant that just because a firm doesn't earn a lot of money off a client doesn't mean it has no responsibilities toward that client," Meissner said. "If it makes representations to a client, it has to live up to them."
The Kadars moved their account to another brokerage in early 2001, the lawyer said.
Copyright 2004, Reuters News Service |
