FINRA Arbitration Panel Orders Citigroup to Pay Senior Investor Couple $3.1M for Alleged Broker Fraud

Citigroup Inc. (C) now has to pay Dr. Nasirdin Madhany and Zeenat Madhany $3.1 million over claims that the financial firm failed to properly supervise a broker, which caused the couple to sustain over $1 million losses. The broker is accused of directing them to invest in real estate developments that later went sour.

In 2010, the couple filed a FINRA arbitration case alleging fraud, negligence, and other wrongdoings related to over $1 million in real estate investments they made between ’04-and ’07. The Madhanys, who are senior investors, were customers of then-Citigroup worker Scott Andrew King, who referred them to politician Lawton “Bud” Chiles III. The latter was looking for investors for a number of real estate projects. King, who allegedly had a conflict of interest (that he did not disclose) from buying two condominiums from Chiles at a discount, is said to have connected the couple and the politician without Citigroup’s knowledge.

The Madhanys invested in two real estate projects, which began to have problems in 2007 when the US housing market failed and that is when the couple lost their money. Also, they, along with other investors, had signed personal loan guarantee related to a $12 million loan on one of the projects. When the loan defaulted in 2009, Wachovia sued all of them. Last year, a court submitted a $10 million judgment against the investors, with each person possibly liable for the whole amount.

The FINRA arbitration panel’s ruling this week includes over $1 million for the couple’s real estate investment losses and $2.1 million for the couple’s portion of the $10 million judgment. Should the Madhanys have to pay the entire $10 million amount, Citigroup will have to pay them back.

Selling Away
The securities industry prohibits selling away, which is a practice involving advisors promoting investments privately without their firm’s knowledge. Brokerage firms can be held liable when a broker engages in “selling away.”

The Resolution Law Group securities lawyers represent investors that have lost their investments because of selling away, elder financial fraud, and other types of securities fraud. Contact The Resolution Law Group today and ask to speak with one of our FINRA arbitration lawyers.

The Resolution Law Group: Goldman Sachs Appeals Vacating of Securities Award, Non-Customers of Brokerage Firm Can’t Compel Arbitration, & Three Governors Named To FINRA Board

Goldman Sachs Wants Third Circuit To Look at Vacated Arbitration Award
Goldman Sachs (GS)wants the U.S. Court of Appeals for the Third Circuit to look at a decision by a lower court to vacate a FINRA securities award issued by a panel member that included arbitrator Demetrio Timban, who was indicted on criminal matters and suspended. The securities case is Goldman Sachs & Co. v. Athena Venture Partners LP and involves an investor accusing the firm of making misrepresentations. The U.S. District Court for the Eastern District of Pennsylvania remanded the award, which favored the financial firm.

The district court said FINRA didn’t give the parties three arbitrators who were qualified and said the respondent’s rights were prejudiced. Judge J. Curtis Joyner said that therefore, a “final and definite award” was not issued. Following the scandal involving Timban, FINRA said it now would perform yearly background checks of arbitrators and other reviews before they are given a case.

District Court Says Buyers Who Are Not Broker-Dealer’s “Customers” Cannot Compel Arbitration
A district court has preliminarily enjoined an arbitration proceeding involving real estate investments. In Orchard Sec. LLC v. Pavel, the U.S. District Court for the District of Utah said that buyers were not a managing brokerage firm’s “customers” and did not have the right to compel arbitration under the SRO’s rules. The court also said that as the plaintiff firm Orchard Securities clearly demonstrated that its chances of success on its claim’s merits.

Margaret and Michael Pavel had filed an arbitration proceeding with FINRA contending that they had securities claims involving their purchase of tenant-in-common interests, including a New York offering that Orchard Securities LLC managed as a brokerage firm. Orchard Securities contended that it could not be made to arbitrate because there was no arbitration agreement or facts showing that the Pavels were its customers and therefore could compel arbitration. The NY offering had been recommended by a registered rep. with Direct Capital, which was a third-party broker-dealer enlisted by Orchard Securities.

Three Governors Are Elected to SRO’s Board, Four Are Reappointed
FINRA says that its members have elected two industry governors: Robert Keenan, who is St. Bernard Financial Services CEO, and James D. Weddle, who is Edward Jones’s managing partner. Keenan was elected small firm governor, while Weddle will be his large firm counterpart. Shelly Lazarus, who is an ex- Ogilvy & Mather chairman and CEO, was named a public governor.

Four other governors received reappointments to the board, which oversees FINRA. The board is comprised of 22 people—10 industry governors and 11 public ones. FINRA’s CEO also has a seat.

If you feel you are the victim of FINRA Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: Mediation, Arbitration, Litigation: What is Best?

stock-photo-4786200-handshake-at-the-business-meeting.jpgThere are three forms of formal dispute resolution to resolve a legal dispute which informal negotiations have fulfilled: mediation, arbitration, or litigation. Understanding the benefits and drawbacks of each is important to decide which method is best to resolve a dispute.
Mediation.

Mediation is a process where a neutral third party assists in resolving the dispute. Mediators are typically lawyers or retired judges who have extensive experience in the field in which parties have a dispute. The decision to settle is always up to the parties. Mediators do not have the power to issue a binding decision. Instead, mediators can often provide their opinion on how they believe matters will be resolved through a litigation or an arbitration and lead the parties to agree by explaining the strengths and weaknesses of each others’ case.

Mediators will often ask the parties to submit confidential written statements and documents that support the parties position to the mediator before the mediation. On the day of the mediation, the parties will meet at a pre-arranged location with the mediator. The process typically involves the parties providing a short explanation of their side of the case to the mediator. The parties will then break into separate rooms and the mediator will shuttle between rooms to discuss the dispute and a resolution.

Mediation is typically confidential. Mediations resolve disputes quickly and are far less expensive than arbitration or litigation, and allow the parties to control the outcome.

Arbitration.Arbitration utilizes a neutral third party to decide a dispute. In arbitration, a dispute is submitted to an arbitrator who makes a binding decision. An arbitrator will review the evidence submitted by all parties and then render a binding decision which can then be entered by a court and enforced. Both parties must agree, typically in writing, to submit to arbitration in order to obtain a binding judgment. Arbitration agreements are controlled by the Federal Arbitration Act and the New Jersey Arbitration Act.Arbitration is typically less expensive and faster than litigation. Discovery of information between the parties is typically limited to the exchange of relevant documents, thereby further reducing costs. Arbitrations themselves are conducted like trials, but less formal and in private.

Arbitrations are conducted by one to three arbitrators depending on the complexity of the matter. Arbitrators are then compensated for their time by the parties. Generally, an unfavorable arbitration ruling cannot be appealed, but that finality can make arbitration less expensive.

Litigation.

The most conventional method of resolving legal disputes is through litigation. Litigation refers to the resolution of disputes between parties in state or federal court.

Generally, litigation is conducted in phases, consisting of pleadings (a complaint and answer), discovery, pretrial motions, trial, and possibly appeal. The party initiating suit file a complaint with the court and pays the appropriate fee. Once the complaint is filed, it must be served on the defendants, who are then given between 20 and 35 days to file an answer. Once the complaint and answer are filed the case moves to the discovery phase.

Discovery provides the parties with the opportunity to ask questions to obtain information from the other side about the claims and defenses that are asserted, and see their evidence in advance. Discovery is conducted by applicable state or federal rules. Typically each party will be required to provide answers to written questions, called interrogatories, and produce documents that each party intends to rely upon at trial. The parties are also provided with an opportunity to depose witnesses. A deposition is an opportunity for a party to ask another party or witnesses questions, under oath, for later use in court.

Once discovery is completed, the parties typically file motions for summary judgment. A motion for summary judgment is a request, by the party filing the motion, that it should win the case because there are no disputed facts which require a trial so it is entitled to a decision in its favor.

Trial is the final step in litigation if the case not is not resolved with a summary judgment motion. A trial can last anywhere from one day to several months, depending on the complexity of a case. The parties can obtain money damages or “equitable” relief such as injunctions and restraining orders. Parties can appeal the verdict.

How Do I Mediate, Arbitrate, or Litigate?

You should always seek experienced counsel early in a legal dispute. Parties can always agree to mediate a matter to obtain an expedited resolution. An experienced attorney can represent the parties in mediation to lead them to a positive outcome.

If parties intend to have an arbitrator resolve a future dispute, they should see an experienced New Jersey contract attorneys. Experienced attorneys can carefully draft arbitration agreements requiring parties to arbitrate future disputes, and can zealously represent their interest in arbitration.

A party is always entitled to litigate if it does not want to mediate or the parties do not have a written arbitration agreement.

The Resolution Law Group attorneys regularly represent people and businesses in mediation, arbitration, and litigation, including drafting arbitration agreements, and litigating disputes about the enforcement of arbitration agreements.  If you are an investor that needs mediation, arbitration, or litigation , do not hesitate to contact our The Resolution Law Group today at (203) 542-7275 for a confidential, no obligation consultation.

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Investor in Goldman Sachs Special Opportunities Fund 2006 to Get $2.5M FINRA Arbitration Award For Allegedly Unsuitable Investment

A Financial Industry Regulatory Authority Panel is ordering Goldman Sachs & Co. (GS) to pay about $2.5M to Tracy Landow for recommending that she invest in the Goldman Sachs Special Opportunities Fund 2006, which she is now contending was an investment that was not appropriate for her. Landow filed her arbitration claim against the unit and her broker a couple of years ago, claiming that unauthorized trades were made. She also alleged misrepresentation and failure to supervise.

The FINRA arbitration panel determined that Goldman liable, ordering the financial firm to compensate the claimant with $1.6M in damages plus about $1M in interest and additional fees. Broker John D. Blondel, Jr., however, was not found responsible. The panel determined that he did not play a part in the alleged investment sales-related violation, theft, forgery, misappropriation, or fund conversion and he was not accountable for the private equity fund and the transactions that resulted. It is recommending that his name be expunged from the case.

Meantime, Landow’s interest in the fund will go back to the financial firm within 30 days from the award date.

FINRA Arbitration
If you believe that your investment losses were a result of broker negligence, you may have grounds for filing a claim with FINRA. It is important that the investment your financial firm recommended to you was suitable for your needs and goals and did not place you at risk of suffering huge losses that your account could not handle.

At The Resolution Law Group P.C., it is our business to recover securities losses on behalf of our clients. Contact us today at www.TheResolutionLawGroup.com.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

US Supreme Court Once Again Upholds Enforcement of Arbitration Agreements

In Marmet Health Care Center, Inc. v. Brown, the US Supreme Court has issued a ruling holding that federal and state courts have to follow the Federal Arbitration Act and support any arbitration agreement that is covered under the statute. The Court said that the FAA pre-empts a state law that doesn’t allow the enforcement of this type of agreement, which requires that personal injury and wrongful claims against nursing homes be resolved outside of court. By holding, the Supreme Court was reaffirming its holding in AT&T Mobility v. Concepcion that FAA displaces conflicting rule when state law doesn’t allow the arbitration of a certain kind of claim.

In this latest ruling, the Court examined three nursing home negligence lawsuits filed by the relatives of patients that died at assisted living facilities. Each family had a signed agreement noting that any disputes, except for those regarding non-payment, would be dealt with via arbitration. Although the trial court rejected the plaintiffs’ claims because of the arbitration agreements, the West Virginia Supreme Court decided to reverse the court’s ruling, holding that public policy of the state prevented a pre-occurrence arbitration agreement in an admission contract for a nursing home that mandated that a negligence claim over wrongful death or personal injury be resolved through arbitration.

By issuing this decision the state’s Supreme Court was rejecting the way the US Supreme Court interpreted the FAA on the grounds that Congress would not have meant for the Act to be applicable to civil claims of injury or death that are tangentially connected to a contract—especially when needed service is a factor.

The US Supreme Court, however, reversed that decision, staying with its own interpretation of the FAA being controlling and a lower court not being able to ignore precedent. The Court sent the case back to state court where inquiry into whether the provision allowing only for arbitration can’t be enforced under state common law principals not specifically addressing arbitration and therefore the FAA wouldn’t pre-empt.

At The Resolution Law Group, our stockbroker fraud law firm represents individual and institutional investors with securities fraud claims and lawsuits. We have helped thousands of investors recoup their losses via arbitration and through the courts.  With securities fraud, the majority of claims have to be resolved through arbitration. One reason for this is that most investors that sign up for accounts through brokerage firms almost always end up agreeing to binding arbitration clauses.

If you, your family, friends, neighbors or associates have been subjected to elder financial abuse, please contact our securities law firm at (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud