Last month, Attorney Jahan K. Manasseh of the Securities Arbitration Law Firm of KlaymanToskes obtained a $254,400 Award on behalf of an elderly California Investor who sustained losses in Medical Capital Notes, a private placement investment. This amount included $125,000 in compensatory damages, $125,000 in punitive damages, and $4,400 in discovery sanctions. The case was decided in San Francisco by a panel of arbitrators from the Financial Industry Regulatory Authority (“FINRA”).
According to the Claim, the Claimant’s advisor represented the Medical Capital Notes to be safe investments, that would provide her with much needed income. Medical Capital, however, later turned out to be a Ponzi scheme, and the Claimant’s investment was wiped out. The Claimant alleged that she sustained losses in the Medical Capital Notes as a result of misrepresentations and omissions made by Respondents as to the risk and the due diligence performed on the investments.
Further, the Claimant alleged that Respondents made unsuitable investment recommendations to the Claimant to invest in the Notes knowing that she did not meet the requisite investor criteria. Interestingly, the Panel awarded punitive damages on this basis when they wrote,
a. The term “qualified investor” generally means that an investor’s net assets (not including the family home) are valued at over $1,000,000.00 or that the investor’s income is over $250,000.00 per year. This set of qualifications varies from investment to investment but is a common standard and the one the Panel used in awarding punitive damages;
b. Respondents Long and Parker knowingly and fraudulently answered the question whether the term “qualified investor” applied to Claimant positively on Claimant’s account application when they knew this to not be true;
c. Had the question as whether Claimant was a “qualified investor” been answered correctly, Claimant would not have been able to invest in the products at issue and thus possibly would not have lost all her money.
d. Respondents Long and Parker knew Claimant was not a qualified investor and was looking for conservative investments to protect her life savings; and
e. Respondents Long and Parker filled out subsequent applications, had Claimant sign them, and changed Claimant’s tolerance from conservative to aggressive without Claimant’s knowledge per the Statement of Claim.
The Award of punitive damages is significant as, historically, FINRA Panels only award punitive damages in roughly 1%-2% of cases. Attorney Jahan K. Manasseh, however, was able to establish the necessary facts and law to warrant an assessment of punitive damages.
KlaymanToskes is continuing to pursue and investigate claims on behalf of investors who sustained losses in private placements including, Patriot Minerals Arapaho of San Antonio, Texas Energy Texoma No. 2, Texas Energy Equitas Drilling Program, The Clare at Water Tower Place, Thompson National Properties 12% Note Program, Sequoia Stonebriar, and Texas Energy Exoro.