Facts

Plaintiff Royal Yates had an investment account with Continental Securities through stockbroker Curt Williams. Williams left Continental to work at GunnAllen Financial. At that time, plaintiff's account was $428,000. Over the course of the next two months, he sustained $240,381 in trading losses and paid $128,840 in commissions. He sued GunnAllen and Williams.

PLAINTIFF'S CONTENTIONS:
The plaintiff alleged defendants breached their duty to prevent improper activity in the account, and of churning the account. (Churning is engaging in excessive trading in for generating commission business).

DEFENDANTS' CONTENTIONS:
The defendants denied any wrongdoing, and argued plaintiff claimed he was an aggressive investor with speculation as his objective. They claimed their trading activity was in accord with plaintiff's expressed goals.

Settlement Discussions

The plaintiff originally submitted his claim to the New York Stock Exchange for arbitration. The NYSE rejected the claim because defendant was not a member of the exchange. The district court accepted the plaintiff's argument that the contract offered a choice of forum and heard the case.

Damages

The plaintiff claimed a total out-of-pocket loss of $353,513, including commission and trading losses, reduced by the amount he expected to lose due to the downward turn of the market during the two month period. He also sought $1 million in punitive damages.

Result

The jury found the defendants liable and awarded $1,802,865. $240,382 in compensatory damages, $1,442,292 in punitives against GunnAllen and $120,191 punitives against Williams.

Deliberation

three hours

Length

three days