Award FiNRA Dispute Resolution

Transcription

1 Award FiNRA Dispute Resolution In the Matter ofthe Arbitration Between: Claimant Purnima Dilip Shah Case Number: vs. Respondent BBVA Securities of Puerto Rico, Inc. Hearing Site: San Juan, Puerto Rico Nature of the Dispute: Customer vs. Member The case proceeded under the Optional All Public Panel Rule/All Public Panel REPRESENTATION OF PARTIES For Claimant Purnima Dilip Shah: W. Barry Blum, Esq. and Melanie S. Cherdack. Esq., Genovese. Joblove & Battista, P.A., Miami, Florida. For Respondent BBVA Securities Of Puerto Rico. Inc.: Debra A. Jenks, Esq. and Robert J. Harvey, Esq., Ciklin Lubitz Martens & O'Connell, West Palm Beach, Florida. CASE INFORMATION Statement of Claim filed on or about: July 7, Purnima Dilip Shah signed the Submission Agreement; June 8, Statement of Answer filed by Respondent on or about: September 26, BBVA Securities Of Puerto Rico, Inc. signed the Submission Agreement: September 26, CASE SUMMARY Claimant asserted the following causes of action: negligence; breach offiduciaryduty; breach of contract; affirmative fraud; non-disclosure fraud; unsultability; self-dealing; conflict of interest; violations of FINRA and NYSE rules; unjust enrichment; and, violations of applicable securities laws. The causes of action relate to Claimant's investment in the Puerto Rico & Global Income Target Maturity Funds, Inc., a proprietary fund of Respondent. Unless specifically admitted in its Answer, Respondent denied the allegations made in the Statement of Claim and asserted various affirmative defenses.

2 Award Page 2 of 5 RELIEF REQUESTED In the Statement of Claim, Claimant requested: compensatory damages in excess of $602,000.00, including, but not limited to, lost principal, income and taxes paid on income reinvested; punitive damages; pre- and post-award interest; attorneys' fees; and, costs, including any forum fees paid or owing. At the close of the hearing, Claimant requested loss of principal in the amount of $1,145,000.00, less the value of securities liquidated from Claimant's account, for a total of $674,000.00, plus interest with three different calculations, as follows: (1) from May 2008 In the amount of $181,441.45; (2) from November 2007 in the amount of $228,598.18; or, (3) from November 2008 in the amount of $153, The Panel had a choice of any of the three calculations, but Claimant requested that the Panel select the amount of $228, Claimant further requested hearing session fees and costs, sanctions in the combined amount of $ (half of which represented attorneys' fees), and punitive damages in the amount of twice the compensatory damages. In its Answer and Affirmative Defenses, Respondent did not specifically delineate a relief request. OTHER ISSUES CONSIDERED AND DECIDED The Arbitrators acknowledge that they have each read the pleadings and other materials filed by the parties. During the evidentiary hearing. Claimant twice moved for sanctions under FINRA Rule 12212(a) ofthe Code of Arbitration Procedure (the "Code") based upon Respondent's failure to comply with the Panel's prior discovery order as to production of documents. Specifically. Claimant requested that Respondent's defenses be stricken and that Respondent be ordered to pay sanctions in the amount of $100,000.00, of which $50, represented attorneys' fees. Respondent objected, stating that there was no prejudice to Claimant. The Panel denied Claimant's request to strike Respondent's defenses, but granted Claimant's request for sanctions, as set forth in the Award section below. The parties have agreed that the Award in this matter may be executed in counterpart copies or that a handwritten, signed Award may be entered. AWARD After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions (if any), the Panel has decided in full and final resolution of the issues submitted for determination as follows: Respondent is liable on the claim of conflict of interest combined with a violation of FINRA rules and shall pay to Claimant compensatory damages in the amount of $ , plus pre-judgment interest at the rate of 4.25% accruing from December

3 Award Page 3 of until the date of service of this Award, plus post-judgment in accordance with the Code. As a sanction for failure to produce documents in accordance with the Panel's order, and pursuant to Rule 12212(a) of the Code, Respondent is liable for and shall pay to Claimant the total sum of $100,000.00, of which $50, represents attorneys' fees. Respondent is liable for and shall reimburse to Claimant the sum of $ representing the non-refundable portion of tiie initial claim filing fee previously paid by Claimant to FINRA Dispute Resolution. Any and all relief not specifically addressed herein, including Claimant's request for punitive damages, is denied. FEES Pursuant to the Code, the following fees are assessed: Filing Fees FINRA Dispute Resolution assessed a filing fee* for each claim: Initial Claim Filing fee =$ "The filing fee is made up of a non-refundable and a refundable portion. Member Fees Member fees are assessed to each member firm that is a party in these proceedings or to the member firm(s) that employed the associated person(s) at the time of the event(s) giving rise to the dispute. Accordingly, as a party, Respondent is assessed the following: Member Surcharge =$ 2, Pre-Hearing Processing Fee =$ Hearing Processing Fee =$ 4, Adjournment Fees Adjournments granted during these proceedings for which fees were assessed; July adjournment by parties = $1, The Panel has assessed the total $1, adjournment fee to Respondent. Contested Motion for Issuance of a Subpoena Fees Fees apply for each decision on a contested motion for the issuance of a subpoena. One (1) Decision on a contested motion for the issuance of a subpoena (1) one $ = $ Total Contested Motion for Issuance of a Subpoena Fee = $200.00

4 Award Paoe 4 of 5 The Panel has assessed the total $ contested motion for issuance of a subpoena fee to Respondent. Hearing Session Fees and Assessments The Panel has assessed hearing session fees for each session conducted. A session is any meeting between the parties and the arbitrator(5), including a pre-hearing conference with the arbitrator(s) that lasts four (4) hours or less. Fees associated with these proceedings are: One (1) Pre-hearing session with a single $450.00/session = $ Pre-hearing conference: May 21, session Two (2) Pre-hearing sessions with the $1,200.00/session = $2, Pre-hearing conferences: December 27, session April 2, session Seven (7) Hearing $1,200.00/session = $8, Hearing Dates: April 8, sessions April 9, sessions April 10, sessions April 11, session Total Hearing Session Fees -$11, The Panel has assessed the total hearing session fees of $ to Respondent. All balances are payable to FtNRA Dispute Resolution and are due upon receipt.

5 Award Paoe 5 of 5 ARBITRATION PANEL Mark C. Perry. Presiding Chairperson I. the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures Isl April 29, 2013 Mark C. Penry. Presiding Chairperson Isl April 26, 2013 Isl April 29, 2013 April Date of Service (For FINRA Dispute Resolution offlce use only)

6 FINRA Dtepute Resolution ArbllrattonNo Award Pace S of 5 ARBITRATION PANEL Marie C. Peny, Presiding Chairperson I, the undersigned Artsitrator, do hereby affinn that 1 am the Individual described herein and who executed this Instrument which Is my award. Concurrlno Arbitrators' Signatures Mari< CyPerry Pubtlc'Art)ltrator. Presiding Chairperson signature Date Date of Sen/lce (For FINRA Dispute Resolutlon office use only)

7 Award Paoe S of 5 ARBITRATION PANEL Marie C. Perry Nancy J. ClifF. Preskiing Chairperson Public Artitrator 1, the undersigned Arbitirator, do hereby affimn that 1 am the indh/idual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures Marie C. Perry ^ Preskiing Chairperson Na Pu or signature Date Date of Service (For FINRA Dispute Resolution office use only)

8 Award Pa( ARBITRATION PANEL Mark C. Perry, Presiding Chairperson Public ArtDitrator I, the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures Mark C. Perry, Presiding Chairperson 2 Abigail Falfton-Rosa Date of Service (For FtNRA Dispute Resoiutton office use only)