A U.S. appeals court has upheld a $1.45 million arbitration award in favor of retired NBA basketball player Horace Grant. Grant sought reimbursement for losses he incurred from investing in risky bond funds that had been marketed to him as safe investments.
The U.S. Court of Appeals for the Ninth Circuit, in an unpublished decision, rejected the claims made by Grant’s former brokerage firm, Morgan Keegan. The firm had argued that the arbitrators in the case were biased, had prejudged the outcome, or had exceeded their authority. However, the court found no merit in these arguments and confirmed the arbitration award in favor of Grant.
This decision marks the second significant legal defeat for Morgan Keegan, a unit of Raymond James Financial Inc., within a week. Earlier in the week, another appeals court ruled in favor of investors in a separate case, resulting in a $9.2 million award. Both cases involved investors who had lost substantial amounts of money after being persuaded to invest in a group of risky bond funds.
Morgan Keegan’s handling of these investments has come under intense scrutiny. The firm marketed these bond funds as safe, conservative investment options, which attracted investors like Horace Grant. However, the funds turned out to be highly volatile and risky, leading to significant financial losses for those who had invested in them.
The arbitration award to Grant reflects the panel’s findings that Morgan Keegan misled investors about the nature of the bond funds. By marketing them as safe investments, the firm failed to provide accurate and adequate information about the potential risks involved. This misrepresentation played a crucial role in the losses suffered by Grant and other investors.
The ruling by the Ninth Circuit underscores the importance of transparency and honesty in financial advising and investment marketing. Brokerage firms have a duty to provide their clients with clear and accurate information about investment products. When firms fail in this duty, they can be held accountable through legal and regulatory channels.
For Horace Grant, the court’s decision brings a measure of justice and financial restitution. For other investors and financial professionals, it serves as a reminder of the critical importance of integrity in the financial industry. The case also highlights the effectiveness of the arbitration process in resolving disputes between investors and brokerage firms, ensuring that wronged investors have a pathway to recover their losses.