Facts

Claimant Warren Beck alleged that he elected to exercise a substantial portion of his Cisco stock options and buy a new residence. In regard to investments in various unspecified securities, he claimed that respondents Citigroup Global Markets Inc. (CGMI) and Karen Mumford breached their contractual fiduciary duties to him. He alleged, among other things, that respondents advised him to invest the purchase price for his new residence with CGMI instead of using it to purchase the residence outright as planned. Further, claimant alleged that respondents did not advise him that investing all or any substantial portion of the purchase price was unsuitable, taking in to consideration his reliance on the invested funds to pay the mortgage necessitated by the investment. Claimant also alleged that respondents constantly advised him to "stay the course" even though other measures could have mitigated his losses.

Respondents denied the claims and liability to claimant, and asserted affirmative defenses.

Damages

Claimant sought damages of at least $1,024,000 and punitive damages totaling $1 million. Respondents sought dismissal of the claims, costs and attorney fees. They also requested that the panel recommend that all reference to the matter be expunged from respondent Mumford's CRD record.

Result

The panel decided: 1) All the claims, including the claim for punitive damages, are dismissed; 2) Respondent Mumford's request that the panel recommend that all reference to this matter be expunged from her CRD record is denied; 3) Each party shall bear its own costs, including attorney fees; 4) All other relief not expressly granted is denied.

Other Information

Respondent Mumford did not file a properly executed submission to arbitration. Under the NASD-DR Code of Arbitration Procedure, she was required to submit to arbitration. ARBITRATORS: Dean J. Dietrich, Chair, Public Arbitrator; Sterling N. Frost, Public Arbitrator; Jane F. Gundermann, Non-Public Arbitrator.