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A costly legal blow was delivered by arbitrators to Securities America Inc., on New Year’s Eve over alleged fraudulent sale of private placements. Nearly $1.2 million in damages and fees were awarded by the Financial Industry Regulatory Authority Inc, or FINRA, arbitration panel to the client who filed the lawsuit.
The award included $734,000 for compensatory damages, punitive damages of $250,000, as well as attorney and expert witness fees amounting to $171,000. The claimant, Josephine Wayman, also filed a lawsuit against California-based representative, Randall Ray Talbott.
Based on FINRA’s BrokerCheck system, Mr. Talbott has 11 other customer disputes pertaining to the Medical Capital notes’ sale. However, in many of the arbitration cases, Mr. Talbott was not named as a defendant. “I don’t know anything about it,” Mr. Talbott said when asked about the award.
The plaintiff’s attorney, Scott Silver, said, “This is a powerful win for the claimants.” Mr. Silver also represents some 100 clients against Securities America Inc. over similar arbitration claims. While punitive damages are not common in FINRA arbitration awards, it just showed how shocked the arbitrators were with Securities America’s actions, Mr. Silver stated.
Securities America can potentially lose millions of dollars more over the sale of private placements prior to the market collapse in 2008.
While the decision did not mention any reason for the award, the arbitrators gave their own comments about their decision. Such comments offer a point of great interest to other claimants.
For their part, Securities America, through the company spokeswoman, Janine Wertheim, stated in an e-mail that, “The award was based on the specific facts of this investor’s case, and we disagree with the outcome.” Ms. Wertheim also wrote in the e-mail saying, “Securities America does not believe it acted inappropriately in the sale of these investments.”