FORT LAUDERDALE, Fla., May 30, 2013 (GLOBE NEWSWIRE) -- Sonn & Erez, a nationally leading law firm for investors, said that RBC Capital Markets, the broker dealer owned by Royal Bank of Canada (NYSE:RY), was slammed with a punitive damages verdict yesterday in a FINRA arbitration case (FINRA #11-03927). RBC Capital Markets was ordered to pay a Bonita Springs, Florida couple $831,277 in damages, including $250,000 in punitive damages, over allegations of misconduct in the sale of Lehman Brothers preferred stock, Alpine Dynamic Dividend Fund, and PowerShares Financial Preferred Fund.
Significantly, the FINRA arbitration panel made findings that RBC Capital Markets should pay $250,000 in punitive damages for "intentional misconduct and gross negligence," finding that "Respondent falsified the Customer Questionnaire as to the risk level that the customer had agreed to and misrepresented that the U.S. Government would not allow Lehman Brothers to fail."
"This is a very significant verdict, as it is very rare that a FINRA arbitration panel awards punitive damages. Here, the broker admitted that he told my clients that the government would not allow Lehman Brothers to fail, as part of his pitch to sell Lehman Brothers Preferred stock as a safe investment," said Jeffrey Erez, Esq. of Sonn and Erez, the lead attorney for the customers. "He also admitted that the Customer Questionnaire wrongly noted that my clients had high tolerance for risk, when in fact they were conservative. I was shocked that the financial advisor was so candid, as most advisors, in my experience, refuse to ever admit to any misconduct in FINRA arbitrations," added Erez.
"We think that FINRA arbitrators, like this panel, should award punitive damages when they see reckless or intentional misconduct, to send a message that such misconduct will not be tolerated," added Jeffrey Sonn, Esq. "Even though punitive damages are rare, this is the third punitive damages verdict our firm has obtained for our clients in FINRA arbitrations in the last 18 months," said Jeff Erez, Esq.
Erez also said that the RBC financial advisor knew or should have known that Lehman Brothers, by late 2007, was a highly leveraged financial firm that was the single largest underwriter of US mortgage bonds and was dangerously exposed to the crashing real estate market and as such, any investment in Lehman Brothers preferred shares was highly risky and unsuitable for customers who did not want high risk.
Sonn & Erez PLC is a nationally leading law firm that represents investors who are the victims of investment fraud or negligence. Sonn & Erez PLC represents individual and institutional investors in a wide variety of investment and securities cases involving fraud, negligence, Ponzi schemes, TICs, structured and principal protected notes, stocks, preferred stocks, bonds, and many other investment products
For more information on the award, please contact Jeffrey Erez or Jeffrey Sonn.