Failed fund leads to FINRA arbitration for Fortune 500 bank client

June 1, 2014

Representation of a Fortune 500 financial institution in a suit related to their ultra-high-wealth unit. Bank recommended that claimants purchase shares in an alternative investment fund as part of their overall diversified investment strategy. After that fund failed, claimants initiated a FINRA arbitration against the bank alleging breach of contract, breach of fiduciary duty, negligence, and fraud. Claimants agreed to JAMS arbitration after the bank moved to dismiss for lack of FINRA jurisdiction. A three-day arbitration hearing was held, focusing on the bank's due diligence performed prior to recommending fund to claimants and the appreciation of claimants’ investment portfolios despite the fund's failure and the financial crisis. Panel awarded claimants zero damages.
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