Facts

Claimant Kelli Jones filed a claim against Salomon Smith Barney Inc. (SSB) and Grant Lee involving various Cisco stocks.

CLAIMANT'S CONTENTIONS:
Claimant's claims involved allegations of unsuitability, negligence, negligent supervision conflict of interest and breach of fiduciary duty. These contentions were based on, among other allegations, respondents' improper recommendation to use of margined stock for the purchase of claimant's house, the failure of respondents to diversify the claimant's holding in Cisco, the failure to protect the value of claimant's portfolio in light of her inexperience as an investor. In addition, claimant alleged that SSB and Lee had facilitated the transfer of the stock from her joint account with her then husband Vincent Jones, without her authorization and without informing her.

RESPONDENTS' CONTENTIONS:
Respondents denied the allegations of wrongdoing and asserted various affirmative defenses. SSB also filed a third-party claim against Vincent Jones that alleged that he is subject to contractual and equitable indemnification if a judgment were entered against SSB. Vincent Jones denied the allegations set forth in SSB's claim and asserted various affirmative defenses.

Damages

Claimant requested $1.5 million in compensatory damages for the alleged failure to recommend the sale of Cisco stock, approximately $7 million in damages for allegedly facilitating the transfer of Cisco stock from her joint account with her then-husband Vincent Jones, and $51,466 in damages for the alleged improper use of margin in her account. SSB and Lee requested dismissal of claimant's claims, expungement of all reference to this matter from Lee's CDR record, and costs. SSB requested indemnification and costs in its third-party claim. Vincent Jones requested dismissal of SSB's third-party claim and costs.

Result

SSB and Lee were found jointly and severally liable to claimant, and claimant was awarded $51,466 in compensatory damages. Claimant's alleged wrongful transfer claim was denied. SSB's third-party claim was denied. The parties each bore their respective costs.

Other Information

This case was heard by a NASD panel consisting of Paul D. Gutierrez (chair), John J. George and Donald S. Duerson.