Shustak Frost & Partners Obtains $622,000.00 FINRA Arbitration Award Against National Broker Dealer on Behalf of 86-Year-Old Client

    SAN DIEGO, CA, June 29, 2012 /24-7PressRelease/ -- Shustak Frost & Partners, P.C., announces that it obtained a $622,000.00 FINRA arbitration award against a major broker dealer on behalf of an 86-year-old investor who had opened a joint account at a San Diego branch office. The amount awarded the Shustak firm's client is approximately $100,000.00 more than the total compensatory damages requested and includes an award of $272,000.00 in legal fees and costs.

According to Thomas Frost, the partner of the firm who tried the case, the elderly investor and his wife opened an account at a San Diego branch and wanted to transfer into that account the assets from an existing account at another firm, TD Ameritrade, which consisted of stocks, cash and margin debt. The elderly couple told their new advisor who met them and opened the account that they did not have wills; both were in their 80s and they wanted to ensure the account assets would transfer one to the other without probate in the event of either's death. The claim alleged that the representative who opened the account knew the substantial assets being transferred into new account were coming from an account the couple previously held at TD Ameritrade which was specifically titled as "Joint Tenants With Rights of Survivorship", meaning the assets would pass to the survivor, by operation of law, without the need for any probate.

The representative who met the couple and opened up the account, however, mistakenly opened the new account as "Joint Tenants in Common". The evidence proved the new account form was improperly written--as there is no legal form of ownership known as "Joint Tenants In Common"--and the representative was not knowledgeable about the types of co-ownership available. When the wife died a few months later, the brokerage firm refused to correct their error; "froze" half of the account; denied the husband access to deposit or withdraw funds into or out of the account to meet margin calls and proceeded to sell off substantial amounts of quality stocks to pay its own margin calls.

The Shustak firm was able to prove the broker dealer's form was poorly drafted and, in fact, the form subsequently was modified to make it easier to understand and distinguish between the types of co-ownership. The Shustak firm also proved the brokerage firm's personnel were negligent in opening the account and mishandling the problem once the wife died.

The $622,000.00 award includes $350,000.00 in compensatory damages and $272,000.00 in legal fees and costs. The Panel concluded there was no contractual or statutory basis on which to award attorneys' fees but nonetheless "determined that it had the authority to award attorneys' fees in this case" because both parties requested them. Claimant requested attorney's fees in his Statement of Claim. While the Respondent broker-dealer did not request attorneys' fees in its Answer, at the close of hearings Respondent's counsel presented detailed fee statements and orally requested that the broker-dealer be awarded its attorneys' fees. An excellent example of application of the rule embodied in law and in the FINRA Arbitrator's Manual--when both sides to a securities arbitration request legal fees and costs, the Panel has the authority to award costs and fees to the prevailing party.

Partner Thomas Frost, associate Mary Scott-Hattendorf (who had her first child during the hearings) and senior paralegal Dominic Giovanniello handled the case for Shustak Frost.

Shustak Frost & Partners handles a wide range of securities and FINRA related issues and has substantial expertise and experience in the securities and brokerage business. The firm has offices in New York and San Diego and represents investors and select registered persons, broker dealers and registered investment advisers in a broad spectrum of complex securities regulatory, litigation and arbitration matters. Please direct inquiries to Thomas Frost, Esq., Shustak Frost & Partners, 401 West A Street, Suite 2330, San Diego, CA 92101; 619-696-9500; [email protected]

Website: http://www.shufirm.com

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