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Investors Win Arbitration Case

Los Angeles Times

A retired couple, who charged that their broker made inappropriate investments with their money, has won a $239,670 arbitration judgment against Prudential Securities Inc.

The award, handed down by a National Assn. of Securities Dealers arbitration panel in Los Angeles and made public Thursday, allowed John and Patricia Murray of Los Angeles to recover all of their investment losses, plus interest and attorneys fees, said Ryan Bakhtiari, an attorney with a Beverly Hills law firm.

Bakhtiari said the couple, retirees in their mid 70s, were unsophisticated investors who placed more than $1 million with Prudential, saying that their primary goals were to preserve capital and live off the income of their savings.

As the technology sector was crashing in early and mid-2000, their broker put $300,000 in mutual funds that were predominantly in tech stocks. The investments lost $158,336 in value.

“The key issue in the case was that these high-risk mutual funds should not have been sold to retirees – and particularly not people in the Murray’s situation,” Bakhtiari said.

Prudential, which became part of Wachovia Securities last year, declined to comment.

Arbitration hearings are not public and arbitration judgments do not reveal the reasons for an award, said Bill McDonald, a Los Angeles consultant specializing in securities cases. However, he said it was unusual for anyone to win 100% of their losses, plus fees.