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Securities Arbitration Award

The Daily Journal

Breach Of Fiduciary Duty, Breach of Written Contract


ARBITRATION: $54,105,616.

CASE/NUMBER: Gerald D. Hosier, individually, and as trustee of the Gerald D: Hosier, U/A/D 10/4/99; Brush Creek Capital LLC; Jerry Murdock Jr. v. Citigroup Global Markets Inc. / 09-03297.

COURT/DATE: FINRA/ April 18, 2011.

ARBITRATOR:  Malcolm T. Cleland.

ATTORNEYS: Claimant- Philip M. Aidikoff, Ryan K. Bakhtiari (Aidikoff, Uhl & Bakhtiari, Beverly Hills); Steven B. Caruso (Maddox, Hargett & Caruso, PC, New York,  N,Y.).

Respondent- H. Nicholas Berberian, Patrick G. King, Tina L. Winer (Neal, Gerber & Eisenberg LLP, Chicago, IL.).

FACTS: Gerald Hosier, Brush Creek Capital LLC, and Jerry Murdock entered into arbitration with Citigroup Global Markets Inc., regarding multiple investments in various municipal bond hedge funds.

CLAIMANTS CONTENTIONS:  Hosier, Brush Creek, and Murdock alleged breach of fiduciary duty, breach of contract, constructive fraud, unsuitability, failure to supervise, and respondeat superior .

RESPONDENTS CONTENTIONS:  Citigroup denied the allegations, asserting various affirmative defenses.

DAMAGES: The Net Out of Pocket (NOP) loss in this case as presented to the panel was $26,893,945 and the market adjusted damages were $34,058,948.

RESULT: The panel awarded full market adjusted damages plus $17,000,000 in punitives, $3,000,000 in attorney fees, $33,500 in expert witness fees, $13,168,in court reporter costs, and assessed forum fees of $26,100 against respondents .

ARBITRATORS: Malcom T. Cleland, Marc H. Schtul and Patricia M. Vondra.