NASD Arbitration Panel Awards Retired Investor $1 Million
BEVERLY HILLS, CALIFORNIA, April 5, 2004 /PRNewswire/ – The following was released today by Aidikoff & Uhl:
A National Association of Securities Dealers (NASD) arbitration panel awarded damages of $1 million against Prudential Securities, Inc., the jointly owned brokerage unit of Wachovia Securities Corp. (NYSE: WB) and Prudential Financial (NYSE: PRU), for failing to properly supervise David Bender, a broker formerly at Prudential’s branch office in Encino, California. On Friday, March 26,2004, the NASD panel ordered the firm to pay $500,000 in punitive damages and $500,000 in compensatory damages to Sylvia Schuyler, a 75-year-old retired widow from Santa Barbara. Ms. Schuyler’s law firm is Aidikoff & Uhl, a Beverly Hills, California, firm that represents individuals in disputes with the securities industry.
“Ms. Schuyler had always been a conservative investor when she opened her first account with Bender in February of 1999, but Prudential permitted Bender to sell many of her fixed-income investments and replace them with aggressive speculative and unsuitable securities, including technology based Unit Investment Trusts, causing large losses within her retirement accounts,” said Philip M. Aidikoff, who tried the case.
Before Ms. Schuyler opened her accounts at Prudential, Bender was already the subject of a number of customer complaints and regulatory inquiries. Despite his questionable past, Prudential allowed Bender to continue as an unchecked broker, specifically advising the branch office manger not to place any formal heightened supervisory controls on him. In fact, an SEC audit of Prudential’s Encino branch failed to find any additional supervisory requirements in place.
“It is clear that by the imposition of a significant amount of punitive damages the NASD panel sent a strong message to Prudential,” Mr. Aidikoff said. “Brokerage firms have a strict obligation to monitor and control the activities of their brokers and the failure to do so will have serious repercussions, both legally and financially.”