A FINRA arbitration panel has decided that Citigroup (C) and Edward J. Mulcahy, one of the firm’s ex-branch managers, has to pay $11 million to investor John Fiorilla. Fiorilla is a legal adviser to the Holy See who went to Citigroup because he wanted to de-risk a $16 million stock position in Royal Bank of Scotland (RBS).
According to the claimant, he asked Citigroup to employ derivatives to assist in hedging his position against losses but the firm did not fulfill the request. When the market failed in 2008 his account suffered over $15 million in losses.
Fiorilla is claiming breach of contract, failure to control and supervise, breach of fiduciary duty, gross negligence, negligence, and other violations. His claim against Mulcahy is over an alleged failure to supervise.
The FINRA arbitration panel says Citigroup has to pay $10,750,000 and 9% interest from 5/1/09 until full payment of the award is reached. Mulcahy, who retired from Citigroup recently, must pay $250,000 and interest.
Citigroup denies the securities fraud allegations and is disappointed with the arbitration ruling.
Arbitration is one venue through which securities disputes between parties are resolved. To be eligible to be heard before a FINRA panel, cases must involve a FINRA-registered individual or entity and an investor (including broker v. investor, broker-dealer v. investor, brokerage firm and stockbrokers v. investors) or multiple FINRA-registered entities and/or individuals (such as broker v. broker, broker v. brokerage firm). Claims need to be submitted within six years that the events leading to the dispute happened.
Investors have to arbitrate before FINRA if this is mandated in their written agreement together, the dispute is with a FINRA member, and involves that member’s securities business. Industry members must arbitrate their disputes with each other before FINRA if a brokerage firm/broker’s securities business activities are involved. Brokerage firms and brokers have to enter into FINRA arbitration if the investor requests it.
The best way to increase the chances your FINRA securities case will come out in your favor is to hire an experienced FINRA arbitration lawyer.
Citigroup Ordered to Pay Investor $11 Million, On Wall Street, August 10, 2013
Arbitration Overview, FINRA
More Blog Posts:
Texas Money Manager Sued by SEC and CFTC Over Alleged Forex Trading Scam, Stockbroker Fraud Blog, August 6, 2013
GAO Wants SEC to Look At Other Criteria for Who Qualifies As An Accredited Investor, Institutional Investor Securities Blog, July 31, 2013
Sonoma County Files Securities Lawsuit Over Libor Banking Debacle, Institutional Investor Securities Blog, July 2, 2013