Facts

Artek Media International Inc., Maxim Levkov, and Marlene Lewis filed a claim against Morgan Stanley Smith Barney LLC, concerning allegations of running a Ponzi scheme.

CLAIMANTS' CONTENTIONS:
Respondent allegedly ran an illegal Ponzi scheme. Claimants asserted causes of action for wrongful conduct, breach of fiduciary duty, constructive fraud, fraud by misrepresentation and omission, breach of written contract, failure to supervise, and violation of state and federal securities laws, NASD Rules of Fair Practice and NYSE Rules.

RESPONDENT'S CONTENTIONS:
Respondent denied the allegations and asserted various affirmative defenses.

Damages

Claimant requested $398,502 for Levkov, $517,132 for Lewis, plus interest, punitive damages, costs and fees.

Result

The FINRA Panel found Morgan Stanley liable to Artek Media and Levkov $150,000 in compensatory damages and $510,000 to Lewis for compensatory damages. Morgan Stanley must also pay punitive damages in the amount of $37,500 to Artek Media and Levkov and $127,500 to Lewis. Morgan Stanley was also required to pay $187,500 and $638,500 in interest and $600 as reimbursement for the initial claim filing fee. Plaintiffs were awarded $1,651,000 in total.

Other Information

ARBITRATORS: Alan M. Rosen, Martin Olinick, David Paul Beauvais.