Allegations
ON OCTOBER 10, 2006 ATTORNEY FOR TRUSTEE [TRUSTEE] COMPLAINS THAT ON OCTOBER 5, 2005 TRINA MITSCH, FINANCIAL ADVISOR FOR THE TRUST ACCOUNT OF ADULT BENEFICIAL OWNERS [CUSTOMER] AND [CUSTOMER], ERRONEOUSLY ACCEPTED INSTRUCTIONS TO DIVERSIFY THE TRUSTS HOLDINGS, WHICH PREVIOUSLY HELD A $344,650 POSITION IN MARATHON OIL. THE TRUSTEE CLAIMS THAT HE REFUSED TO ACCEPT THE ADVICE OF MITSCH TO DIVERSIFY THE ACCOUNT AND THAT BECAUSE THE FINAL ORDERS CAME FROM [CUSTOMER], A BENEFICIARY, RATHER THAN HE AS TRUSTEE, THE TRADES WERE UNAUTHORIZED. ALTHOUGH THE INVESTMENTS RECOMMENDED TO DIVERSIFY THE ACCOUNT HAVE GAINED IN VALUE, MARATHON OIL IN PARTICULAR HAS OUTPERFORMED THE MARKET SINCE ITS SALE. AS A RESULT, THE TRUSTEE REQUESTS THAT THE ACCOUNT BE RETURNED TO ITS ORIGINAL HOLDINGS, WHICH AT MARKET ON OCTOBER 24, 2006 WOULD COST APPROXIMATELY $106,000. NOTE THAT [TRUSTEE'S] ATTORNEY ALSO NAMED TRINA MITSCHS BUSINESS PARTNER, [THIRD PARTY], IN HIS COMPLAINT WITH THE SAME ALLEGATIONS AS THOSE RAISED AGAINST MS. MITSCH. HOWEVER, [TRUSTEE] PERSONALLY DID NOT NAME [THIRD PARTY] BEFORE RETAINING COUNSEL AND [THIRD PARTY'S] DIRECT CONNECTION TO THIS MATTER IS IN DOUBT. ARBITRATION FILED ON 05/30/2007. ALLEGATIONS: TRUSTEE, A NEW JERSEY RESIDENT, ALLEGES THAT WACHOVIA SECURITIES, WITHOUT HIS AUTHORIZATION, SOLD SECURITIES IN OCTOBER 2005 AND UTILIZED THE SALE PROCEEDS AND ADDITIONAL CASH TO PURCHASE MUTUAL FUNDS IN NOVEMBER AND DECEMBER OF 2005. TRUSTEE REQUESTS $153,085.26 IN DAMAGES, REIMBURSEMENT OF FEDERAL AND STATE TAXES PAID BY THE TRUST, AND LEGAL AND ACCOUNTING FEES.
Damage Amount Requested
$339,000.00
Settlement Amount
$150,000.00
Broker Comment
CLAIMANT AND RESPONDENTS – WHICH INCLUDED THIS ADVISOR, HER TWO PARTNERS AND THE FIRM – AGREED TO SETTLE THIS ARBITRATION FILED ON 05/30/07. DISPUTE IN THE INTEREST OF AVOIDING FURTHER COSTLY AND TIME-CONSUMING FORMAL LITIGATION, WITHOUT RESPONDENTS ADMITTING LIABILITY, IN THE AMOUNT OF $150,000.