In November 2017, a former client of Morgan Stanley Smith Barney LLC and Wells Fargo Advisors, LLC settled a FINRA arbitration for losses sustained from investments in Arch Coal, Inc. and Cliffs Natural Resources. The investors were clients of financial advisor Steven Brockovich (CRD# 1343564).
The claimant alleged that the investments recommended to him between 2012 and 2014 were misrepresented to him and unsuitable for him. The client sought no less than $160,000 in compensatory damages and the case was settled for $60,362. Wells Fargo settled the matter for $5,362 and Morgan Stanley Smith Barney settled the matter for $55,000.
The causes of action included breach of fiduciary duty; breach of written and oral contract; constructive fraud; fraud by misrepresentation and omission; failure to supervise and control; financial abuse; and violation of state and federal securities laws, and FINRA rules of fair practice and NYSE rules. The FINRA arbitration hearing was conducted in San Francisco, California.
In the Statement of Claim, the claimant requested compensatory damages not less than $160,000.00; lost opportunity cost; rescission of the unsuitable investments Morgan Stanley and Wells Fargo Advisors, LLC recommended; cost of proceedings; punitive damages; interest at the legal rate on all sums recovered; attorneys’ fees and costs; and such other and further relief as the panel deems just and appropriate.
Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.
Arch Coal, Inc. is an American coal mining and processing company. The company mines, processes, and markets bituminous and subbituminous coal with low sulfur content in the United States. Arch Coal, Inc. filed for chapter 11 protection in January 2016 after a failed effort to restructure its debts outside of bankruptcy court. The company emerged from bankruptcy in October 2016 with more than $300 million of cash on its balance sheet and clearing nearly $5 billion in debt from the coal producer’s books.
Cleveland-Cliffs, Inc., formerly Cliffs Natural Resources, is a Cleveland, Ohio firm that specializes in the mining and beneficiation of iron ore. As of December 19, 2017, Cliffs Natural Resources (CLF) trades on the NYSE for $6.75, down from a high of $37.65 in February 2013.
Brockovich was registered with Morgan Stanley in Reno, Nevada from 2009 to 2014. Brockovich is not currently registered with any brokerage firm.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Morgan Stanley Smith Barney LLC and Wells Fargo Advisors, LLC may be liable for investment or other losses suffered by Brockovich’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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