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Finra panel orders Wells Fargo to pay $125,000 to investor for reverse convertible sales
New York, Jan. 21 - A Finra arbitration panel awarded $125,000 to an investor who was sold reverse convertibles linked to IndyMac Bank, Whole Foods Market and JetBlue by a Wells Fargo Investments, LLC broker.
The investor was a senior citizen, according to an announcement by his attorney, Jonathan Evans of Studio City, Calif., law firm Jonathan W. Evans & Associates.
The award was within the range of compensatory damages of $106,020 to $164,857 requested at the close of the hearing. Finra's arbitration panel denied a claim for treble damages for alleged elder abuse and required each side to pay their own costs including attorneys' fees.
"This was a very sad case; the claimant was a cancer patient and was trying to preserve his estate for his children," said Evans in a news release.
"Wells Fargo broker first sold him a certificate of deposit which had no risk of loss of principal. After that, the broker solicited him to purchase three reverse convertible securities in May 2008."
Six months later, two of the reverse convertibles imploded, causing "massive losses," Evans added.
The Finra panel found Wells Fargo solely liable. Claims against Kennon Klein, also named as a respondent, were denied.
"Reverse convertible bonds are terrible products for the average investor, and anyone who suffered outsized losses should seek an independent opinion whether to pursue a claim against his or her broker as did my client," Evans commented, adding: "In this case, the testimony demonstrated the broker sold reverse convertible securities to many clients and the related commissions consisted of 73% of the broker's earnings in the second quarter of May 2008."
The Finra case number is 09-00339.
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