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NYSE Arbitration Panel Awards $3.1 Million Against Sands Brothers & Co., Ltd.

PR Newswire

BEVERLY HILLS, CALIFORNIA, July 20, 2004 /PRNewswire/ – The following was released today:

A New York Stock Exchange (NYSE) arbitration panel awarded investor Jay Hoge damages of $3.1 million against Sands Brothers & Co., LTD. (Sands Brothers) for making unauthorized trades and failing to properly hedge a concentrated stock position in Finisar Corp. (NASDAQ: FNSR), a California based technology company.

On Wednesday, July 14, 2004 the NYSE arbitration panel ordered the firm to pay Mr. Hoge $2.1 million in compensatory damages and $1 million in punitive damages. Mr. Hoge is represented by a Beverly Hills, California, firm that represents individuals in disputes with the securities industry.

“Mr. Hoge opened an account at Sands Brothers and his broker, Stephen Soler, began trading the account without seeking my client’s approval. Sands Brothers generated a large amount of trades that were not in Mr. Hoge’s best interest. A brokerage firm has a duty to seek consent before any trade is placed and to always put the client’s interests first,” said Hoge’s attorneys, who tried the case.

“During the bull market, brokerage firms like Sands Brothers sought out high net worth clients and technology executives like Mr. Hoge and pitched them on hedging strategies for concentrated stock positions. Mr. Hoge asked for help in protecting his concentrated Finisar stock he received when Finisar acquired his company, Demeter Technologies. Sands Brothers mismanaged the hedging strategy causing Mr. Hoge massive losses.”

“It is clear that by the imposition of a significant amount of punitive damages the NYSE panel sent a strong message to Sands Brothers and the industry. Brokerage firms have a strict obligation to control the activities of their brokers and the failure to do so will have serious repercussions, both legally and financially.”