JP Morgan Securities (JPMS), along with its ex-brokers, Avi Schottenstein and Evan A. Schottenstein, who are also grandsons of the claimant, are ordered to pay $19 million to a senior investor, as determined by an arbitration panel of the Financial Industry Regulatory Authority (FINRA), in settlement of her claim for losses incurred in her brokerage account because of unauthorized and fraudulent trading in complex products.
The $19 million includes the $4.7 million to be paid by JPMS in compensatory damages and another $4,3 million to rescind a Coatue Private Equity Fund investment and return capital calls already paid to Coatue. $9M is to be paid by Evan A. Schottenstein to his grandmother in compensatory damages, apart from $172,630 in costs. JPMS and Evan together have to bear 50% of the claimant’s legal fees. Not forgetting Avi Schottenstein who needs to pay $602k to his grandmother in compensatory damages.
Beverley Schottenstein of Bal Harbour, Florida, is the senior investor who filed the claim. She belongs to the family that owns holding company Schottenstein Stores Corp. Avi and Evan Schottenstein, the two JPMS registered representatives named in the suit, are her grandsons.
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Beverley sought $10M in compensatory damages as well as punitive damages in her arbitration claim, in her capacity as an individual and trustee of her revocable trust. She accused her grandsons of acting without authorization in buying and selling securities their employer was a market maker for, new issue offerings in preferred securities and debt, auto-callable structured notes, and a host of other instruments.
Evan, who was fired by JPMS in 2019, seemingly began investing his grandmother’s money in 2006 while he was a broker with Citigroup Global Markets Inc. and continued with it while he moved first to Morgan Stanley and then finally JPMS.
He worked for 13 years in the industry according to his BrokerCheck record.
Avi, who also appears to have left JPMS in 2019, worked for 9 years in the industry, including a stint as a Morgan Stanley broker prior to JPMS.
Under Florida law, JPMS, along with its two ex-brokers, were held liable for abuse of fiduciary duty, constructive fraud, fraudulent misrepresentations, and omission, as well as elder financial abuse. This was determined by a three-member arbitration panel in Boca Raton in a hearing held over Zoom.
This is not the only instance where JPMS brokers have been held responsible for unauthorized trades in an older customers’ account. A year earlier, registered representative Lauren L. Wing had been fined $5K by FINRA for two trades with a total value of $314K for a senior investor that were executed without permission.
Initially suspended for a month, Wing was fired by the firm in 2019.
Senior investors that are concerned about their investments, should call an investment fraud lawyer. Most law firms will review investments and your situation for free.