NASD Arbitration Panel Finds Smith Barney Liable
BEVERLY HILLS, CALIFORNIA, March 18, 2004 /PRNewswire/ – The following was released today by Aidikoff & Uhl: A National Association of Securities Dealers (NASD) arbitration panel found Salomon Smith Barney, Inc. (n/k/a Citigroup Global Markets, Inc.) the brokerage firm unit of Citigroup, Inc. (NYSE: C) liable and ordered the firm to pay investor Judy Moran a total of $274,000 involving its broker John Draper, Sr.’s failure to monitor Mrs. Moran’s investment portfolio and take action to prevent substantial losses.
Mrs. Moran alleged and proved that shortly after her husband’s passing in August 2000 her broker recommended that she continue to hold aggressive technology based mutual funds which were unsuitable given her changed life circumstances. The investments in her account represented the bulk of her savings which she needed to provide income and living expenses. Smith Barney never made any recommendations to purchase or sell any securities she inherited from her husband who was an aggressive investor. Between late 2000 and early 2001 Mrs. Moran’s account was decimated by Smith Barney’s failure to monitor her accounts and recommend appropriate changes in her accounts.
Judy Moran was represented by Aidikoff & Uhl, a Beverly Hills, California law firm that represents customers in securities arbitrations. According to Phil Aidikoff, who tried the case: “One of the critical functions of an investment advisor is to monitor the portfolio of a customer and to recommend changes consistent with their financial conditions, needs and objectives. After the passing of Mrs. Moran’s husband, Smith Barney sat on its hands and watched her portfolio evaporate. This should never have happened.”
Mr. Aidkoff stated: “This is a landmark case in the field of securities arbitration. This decision demonstrates that brokerage firms will be held accountable for failing to take prompt and responsible action when they manage a client’s portfolio.”
The award represents a return of capital losses suffered by Mrs. Moran plus reimbursement of her expert witness costs.