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21 Awards in August, including the First Union – Raymond James Award

NYSE AWARDS, 8/02: Some 21 Awards were released by the New York Stock Exchange in August 2002, in a variety of types and sizes. The largest Awards in this batch ($2 million), a Member-Member controversy involving First Union and Raymond James (NYSE ID #2002-008583 (Indianapolis, IN, 8/2/02), was previously reported in SAA 02-31. Certainly, one of the largest customer claims on record, in terms of compensatory damages alleged ($36.2 million), resulted in dismissal of the consolidated claims of a large group of investors, who charged that the fraud of their hedge fund (Maricopa) principal should be visited upon the broker-dealer he used (Beaver v. Dean Witter Reynolds, Inc. dba Morgan Stanley, Dean Witter, NYSE ID #2001-008840, Clearwater, FL, 7/10/02). According to Bradford D. Kaufman, Greenberg & Traurig, West Palm Beach, FL, Respondent’s counsel in the case, “Claimants’ theory was that Morgan Stanley was in a unique position to uncover and detect the Maricopa fraud.”

Two other Florida Awards caught our attention (Westcott v. PaineWebber, NYSE ID #2001-008869 (Ft. Lauderdale, 8/7/02), and Morejon v. Raymond James Financial Services, Inc., NYSE ID #2001-009619 (Ft. Lauderdale, 8/8/02), because they each addressed the requirement set forth by the Florida Supreme Court in the Moser case. That decision directed Florida arbitrators to include in their Awards a statement as to the disposition of statutory claims that could lead to an attorney fee award.

In the Morejon case, the investor’s claim for $100,000 in compensatory damages concerned “over concentration of highly speculative technology stocks traded on margin” and included a request for attorney fees. The Panel granted an award of $10,000 and added “that the claimant did not prevail under Florida Statute 517.301 and claimant is not entitled to an award of attorney’s fees; under the circumstances, an award of entitlement to attorneys’ fees to respondent under Florida Statute 517.211 would be unjust and is specifically denied.”

In the Westcott case, the Panel not only dismissed the customers’ limited partnership claims, but ordered expungement from the CRD record of the claims against the broker. Despite this explicit denial of all claims, the Award incorporates the same language that appears in the Morejon Award regarding the denial of attorney fees to claimant.

Manek v. Merrill Lynch, Pierce, Fenner & Smith, Inc., NYSE ID #2001-008964 (Okla. City, 7/30/02) pitted some of Oklahoma’s top securities arbitration attorneys against each other in a hard-fought “research analyst” case. The Case Summary indicates that an amended Statement of Claim against only Merrill Lynch alleged, among other things, “a scheme to artificially inflate the prices of certain stocks by issuing materially false and misleading research notes or opinions….” The claim for $100,001 was tried in six hearing sessions, following four pre-hearing conferences and disposition of numerous motions, and resulted in two actions: a dismissal of the claim against Merrill and a disciplinary referral (without explanation) regarding two individual Merrill employees who were initially named, but dropped in the amended Statement of Claim. The apparent inconsistency in these two actions could be explained by this fact: while Claimant dropped the employees, Merrill filed a third-party claim for indemnification against the two, in the event their actions resulted in liability against Merrill.

All in all, the 19 Awards relating to customers resulted in six monetary awards favoring customers. In two of the 13 “losers,” broker-dealers claimed and won damages against customers for alleged account deficits. Another Award (Benedict v. Salomon Smith Barney, NYSE ID #2002-009897, Wash. DC, 8/2/02) resulted in a stipulation that may have included a monetary settlement to the customer, but the Panel’s order was directed only to “the CRD record of [one of seven individual Respondents, which] should be expunged to remove all references to this matter as confirmed by a court of competent jurisdiction.”

Copyright 2000-2002 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article. 

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