Finra arbitrators award couple $16.6 million from BNP Paribas

In longest-running arbitration case in 20 years, panel rules leveraged derivative investment was unsuitable

Jun 30, 2015 @ 1:57 pm

By Liz Skinner

BNP Paribas Securities Corp. must pay a retired London couple $16.6 million for selling them an unsuitable investment in the longest-running Finra arbitration hearing in 20 years, a three-member panel has ruled.

The award in the five-year-old Financial Industry Regulatory Authority Inc. case includes restitution for the $14.3 million the clients invested in a leveraged derivative call option, plus damages and $500,000 for attorneys' fees, the arbitration panel said in its June 26 decision.

(More: Stepping up protection for the elderly)

James and Margaret Eringer spent about 60% of their investible assets on the investment in March 2007, buying it through Ontonimo Limited, a corporate entity BNP Paribas Securities required the couple create because the investment firm had a policy that prohibited the sale of this type of security to retail clients, according to Brian Neville, the couple's lawyer who is with Lax & Neville in New York.

A London broker recommended the couple invest with the New York-based BNP Paribas Securities broker, Mr. Neville said.

A BNP Paribas Securities statement said the firm was disappointed by the decision.

“BNP Paribas Securities Corp. takes its responsibilities to its clients seriously and believes that it conducted itself professionally and appropriately with respect to Ontonimo and its investments,” the firm said.

(More: Finra arbitration panel hits Robert W. Baird & Co. with $17.8 million penalty)

In addition to being the longest Finra arbitration hearing in two decades, the 95-day arbitration hearing is the second-longest ever, according to research that Securities Arbitration Commentator provided for Lax & Neville.

The longest was 99 days in a 1995 case, Mr. Neville said.

The Eringers, who are now in their late 60s, made the money they invested with BNP Paribas Securities through a family business that made New York-style cheesecakes in London, Mr. Neville said.

(More: Finra files complaint against broker for trying to inherit $1.8M from client with Alzheimer's)

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