Facts

Claimant David Wolfson Living Trust (Trust) brought claims against respondents Stockcross Financial Services Inc., Thomas Copper, and Peter Boom, alleging breach of fiduciary duty, common law fraud, constructive fraud, elder abuse, negligence, securities laws violations, California Civil Code violations, Business and Professions Code violations, breach of written contract, failure to supervise, and respondeat superior. These claims arose in connection to investments purchased on margin and made in fixed income investments, such as General Motors Acceptance Corp. Corporate Bonds, General Motors Acceptance Corp. Smart Notes, Federal National Mortgage Association Preferred Series, and reverse convertible bonds.

CLAIMANT'S CONTENTIONS:
The Trust alleged that, in the course of their relationship with David Wolfson, the respondents engaged in misconduct and self-dealing. The Trust alleged that Woflson was a vulnerable senior citizen over which the respondents exercised undue influence. The Trust contended that the respondents recommended and solicited unsuitable and over-concentrated volatile, high risk and speculative investments that were actively traded on margin. The Trust further alleged that the respondents encouraged Wolfson to leverage the equity in his home with a reverse-mortgage transaction to utilize as investment capital. The Trust also alleged that the respondents encouraged Wolfson to turn over all of his cash accounts, cash reserves which he had saved for emergencies, and insurance proceeds which he had received to replace his automobile.

RESPONDENTS' CONTENTIONS:
The respondents rejected the claimant's allegations of wrongdoing.

Damages

The Trust sought $319,797.56 in general and compensatory damages, disgorgement of commissions and fees paid to the respondents, statutory damages, treble damages, lost opportunity costs, punitive damages, attorney fees, prejudgment interest, and post-judgment interest. The Trust also requested declaratory relief, stating that the margin debt gained in the claimant's account is null and void.

Result

The arbitration panel unanimously awarded the respondents $2,969 in sanctions against the Trust for using the respondents' transcripts. The panel awarded the Trust $10,000 as sanctions against the respondents for failure to adhere to discovery orders, $319,798 in compensatory damages, $959,395 in treble damages pursuant to the Financial Elder Abuse Act (WIC Section 15600 et seq), $21,320 in prejudgment interest, post-judgment interest at 10 percent per annum, $233,944 in attorney fees, $21,064 in costs, and $61,641.21 in expert witness fees. Further, the panel exonerated the balance on the Trust's margin account, which amounted to $37,000. Current counsel for Stockcross advised that Stockcross intends to move to vacate the arbitration award.

Other Information

ARBITRATORS: Thomas R. Watkins, Herbert Murez, John B. Wells.