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Recent Cases: Investor awarded losses plus attorneys' fees for unsuitable trading and failure to supervise. |
During the late 1990s and early 2000s, while Ruth Meredith maintained an account at Bear Stearns, she was legally blind, a widow, and in her 80s. Having grown up during the Great Depression, Mrs. Meredith was frugal with money and preferred conservative, income-producing investments. In or around 1998, while Mrs. Meredith was living in a retirement community with on-staff nursing care, Mrs. Meredith's son, (who had a power of attorney for Mrs. Meredith) in concert with the Respondents, began trading her account with increased frequency. In fact, discretion was ultimately granted to Respondents to trade the account. The nature of the investments in Mrs. Meredith's account changed drastically. High risk internet and telecommunications stocks began to be traded with great frequency despite the fact that Mrs. Meredith's situation clearly called for conservative investments. The vast majority of the trades were solicited by Respondents or made using discretion. Despite the change in the nature of the account, Respondents never once contacted Mrs. Meredith by phone or by letter to confirm that the account was being handled in accordance with her wishes. Although Respondents argued that Mrs. Meredith's son alone was responsible for the activity in the account, the arbitrators found that Bear Stearns had failed to adequately supervise the account and that the investments were not suitable. As such, Mrs. Meredith's estate was awarded actual damages of $142,0000 and attorneys' fees of $49,700. The case was handled by Ed Dovin and Sandra Malkin. |
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