Investors Awarded $7 Million in Stockbroker Arbitration

Boca Raton, FLWhen investors suspect they have become the victim of stockbroker fraud they can turn to stock broker arbitration to recover some of their lost money. Recently, investors in Florida were awarded millions of dollars in their stock fraud arbitration.

According to the South Florida Sun Sentinel, (September 4, 2009), more than 30 investors, most of them elderly, were awarded more than $7 million in damages after the investors accused their stockbroker of fraud. The award was made by a federal Financial Industry Regulatory Authority (FINRA) arbitration on August 14, 2009.

The arbitration panel ruled that broker Gary J. Gross violated FINRA laws by selling securities that were unsuitable for the investors. The investors alleged their portfolios had numerous private investments in public companies but those investments were difficult to sell when the investors found they needed cash. Some investors wound up selling their homes or refinancing their mortgages to make ends meet.

Despite the $7 million award, the investors apparently face a battle to collect any money because the stockbroker has declared bankruptcy.

Investors are upset that more was not done to protect them from Gross. The Sun Sentinel notes that Gross has a record approximately 100 pages long involving disputes with customers and regulators. Furthermore, Gross' former employers paid more than $4.5 million to settle 33 disputes in eight years.

Gross also had a battle with the Securities and Exchange Commission, which charged him with defrauding customers by misrepresenting the risks associated with securities he bought for them. The SEC further charged that Gross excessively traded (churned) investors' accounts and inflated the value of the accounts.

How much money did investors lose? One investor, Rosalind Drabin, said she invested $800,000 with Gross and within four months had only $280,000 left. Meanwhile, a different investor, Sheila Kramer, said she was told she had almost $2 million in her account when in reality she had just over $100,000.

Also in Flordia, an arbitration claim has been filed against Ameriprise Financial Inc., according to the South Florida Business Journal. The FINRA arbitration alleges that a stockbroker did not adequately inform a senior investor about the risks associated with certain products that were unsuitable for an investor of his age. The 77-year-old investor was allegedly recommended a variable annuity even though the investor was not eligible for the guaranteed death benefit.