Finra arbitrators ordered Pershing to pay a group of 23 investors $5.6 million in damages over losses they suffered due to the Ponzi scheme perpetrated by R. Allen Stanford.
The investors, most of whom were retirement savers or represented estates and trusts, alleged that Pershing “aided and abetted criminal activities” related to the Stanford Ponzi. The three-person, all-public Financial Industry Regulatory Authority Inc. arbitration panel found Pershing liable and awarded the investors approximately $2.8 million in compensatory damages and $2.8 million in punitive/exemplary damages, according to the Feb. 18 award.
The original group of nine claimants alleged that Pershing was culpable in their losses following their purchase of certificates of deposit from the Stanford International Bank Ltd. Two other groups of investors claimed similar losses as a result of CD purchases from the Stanford bank, which was in Antigua. The three actions, which were filed with Finra between November 2018 and January 2019, were consolidated into one arbitration case.
Mr. Stanford was convicted in 2012 of committing a $7.2 billion fraud that revolved around selling CDs from the Antigua bank over the course of 20 years.
The victims’ lawyer, Scott Hirsch, said Pershing had a relationship with Stanford Group Co., the Stanford broker-dealer, which was on the custodian’s platform. Mr. Hirsch said that Pershing spotted red flags regarding the CDs issued by the Stanford bank but, that Mr. Stanford never addressed Pershing’s concerns.
His clients “would not have bought the CDs had they known about what Pershing knew about Stanford and the questions not being answered,” said Mr. Hirsch, owner of Scott Hirsch Law Group in Boca Raton, Fla. “Stanford kept putting [Pershing] off, and they kept doing business.”
Finra arbitrators “were disturbed by what they heard,” Mr. Hirsch said. “They determined the behavior was so egregious that it warranted punitive damages.”
A Pershing spokeswoman said the firm does not comment on legal matters.
This is the second time Mr. Hirsch has won an arbitration case against Pershing involving clients who bought investment products associated with Mr. Stanford.
A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.
The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.
Its SEC filings said one thing - a congressional probe said another.
Sham agreements allegedly padded revenue by 345%.
"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
