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Citi told to pay Dallas star $11m

10/7/2010

Financial Times

Citigroup was ordered to pay more than $11m to resolve allegations that it mishandled the accounts of Larry Hagman, the actor best known for his portrayal of the conniving Texas oil baron JR Ewing in the television soap opera Dallas.

Arbitrators from the Financial Industry Regulatory Authority found Citi liable in the case and directed the bank to pay Mr Hagman $1.1m in compensatory damages and $439,000 in legal fees.

The panel awarded $10m in punitive damages to the charities of Mr Hagman’s choice.

The award, revealed on Thursday, was one of the largest for Finra arbitrators, and comes as US regulators including the Securities & Exchange Commission seek to shore up public confidence in their willingness to protect investors. Finra is a self-regulatory body of the US financial industry.

A Citi spokesman said: “We are disappointed and disagree with the panel’s finding and we are reviewing our options.”

Mr Hagman alleged that Citi committed fraud and breached its fiduciary duty. The allegations involved unspecified securities he held at the bank and the purchase of a life-insurance policy, the three-person panel wrote this week.

The actor filed his complaint in May 2009, four months after Citi and Morgan Stanley agreed to fold their retail brokerage businesses into a joint venture.

The punitive award was the largest after a $15m settlement in 1999.

A spokesman for Mr Hagman said the actor had no immediate comment on the ruling and was not ready to name the charities that would receive donations.

The arbitrators denied Citi’s request to expunge all references from the case from the records of Mr Hagman’s financial adviser, Lisa Detanna.

According to Finra’s broker database, Ms Detanna works at the Beverly Hills, California, offices of Morgan Stanley Smith Barney.

A Morgan Stanley spokeswoman confirmed that Ms Detanna remained an employee and declined further comment.


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