JPMorgan Ordered to Pay More Than $4 Billion to Widow and Family

JPMorgan Chase & Co. was ordered by a Dallas jury to pay more than $4 billion in damages for mishandling the estate of a former American Airlines executive, but the verdict will probably be knocked down on appeal.

Jo Hopper and two stepchildren won the probate court verdict over claims that JPMorgan mismanaged the administration of the estate of Max Hopper, who was described as an airline technology innovator in a statement issued by the family’s law firm.

Large punitive damages verdicts like the one in the Hopper case are often scaled back because the U.S. Supreme Court has ruled they can’t be disproportionate to actual damages. In this case, the jury awarded less than $5 million in actual damages.

The bank said it acted in a professional manner and in good faith on Hopper’s estate and is “highly confident” the jury verdict won’t stand under Texas law.

“Clearly the award far exceeds any possible interpretation of Texas tort reform statutes,” Andrew Gray, a spokesman for the bank, said in an emailed statement. “There has been no judgment entered by the court based on this verdict.”

Max Hopper, who pioneered a reservation system for the airline, died in 2010 with assets of more than $19 million but without a will and testament, according to the statement. JPMorgan was hired as an administrator to divvy up the assets among family members.

Putters, Wine

“Instead of independently and impartially collecting and dividing the estate’s assets, the bank took years to release basic interests in art, home furnishings, jewelry, and notably, Mr. Hopper’s collection of 6,700 golf putters and 900 bottles of wine,” the family’s lawyers said in the statement. “Some of the interests in the assets were not released for more than five years.”

"The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable," Jo Hopper said in the statement.

The court’s verdict form shows jurors awarded $8 billion in punitive damages against the bank. Alan Loewinsohn, attorney for Jo Hopper, said in an interview there may be duplication of some of the damage findings. As a result, he said, the punitive damage award could end up being “somewhere between $4 billion and $8 billion.”

Loewinsohn said he asked the jury to take into account the bank’s worth and asked them for $2 billion in punitive damages. “I believe they used that figure for the other parties in the case as well,” he said.

Fiduciary Duty

The jury found that the bank committed fraud, breached its fiduciary duty and broke a fee agreement, according to court papers.

At the lower end of that range, the jury’s award would erase almost two-thirds of the $6.6 billion profit that JPMorgan generated globally during the second quarter.
And it would rank high among the largest sanctions ever levied against the bank -- somewhere between the $2.6 billion it agreed to pay in 2014 for allegedly failing to stop Bernard Madoff’s Ponzi scheme, and a $13 billion settlement it reached with government authorities in 2013 for its handling of mortgage bonds that fueled the financial crisis.
The verdict form shows jurors were advised to consider factors including “the net worth of JPMorgan.” Indeed, the bank has a stock market value of about $330 billion.

Full Article & Source:
JPMorgan Ordered to Pay More Than $4 Billion to Widow and Family

LPL to Pay Treble Damages to Elderly Client

Marilyn Green & daughter Melissa

A FINRA arbitration panel recently awarded an 82-year-old Florida resident and her daughter treble damages, ruling LPL Financial and its broker failed to adequately explain the tax consequences on an investment.

In an award filed last week, an arbitrator awarded Marilyn Green and her daughter, Melissa, $52,062, well over the $9,000 in damages the two sought from LPL Financial. The arbitrator found the firm and the broker involved failed to provide suitable investment recommendations. The arbitrator also noted that because the case involved Marilyn Green, 82 and suffering from advanced dementia and depression, it qualified for treble damages for exploitation of an elderly individual under Florida law.

LPL said in a statement Monday that it was aware of the award and "respectfully disagrees" with the findings of the arbitration panel.

"We believe the advisor, who remains registered with LPL, acted in good faith to serve the best interests of his client in this matter," the firm said. "While we disagree with the award, we are sensitive to the very important issue of suitability for elderly investors, and we are complying fully with the decision."

The case stems from LPL advisor Samuel Izaguirre’s recommendation to Melissa, who serves as power of attorney for her mother, that she withdraw the proceeds from a maturing certificate of deposit. Melissa met the advisor through her bank, BankUnited, which contracted with Izaguirre and LPL to provide investment advice and brokerage services to its customers.

But according to the complaint, Izaguirre failed to explain to Melissa that the funds were held in her mother’s individual retirement account and withdrawing the proceeds would result in her mother having to pay $9,000 in taxes.

Acting on the recommendation she received from Izaguirre, Melissa cashed out the CD, worth about $30,000, in August 2014. According to the complaint, Melissa had never owned an investment before and had no idea, until she visited her local H&R Block office months later to prepare her mother’s tax filings, of the tax implications.

The $9,000 tax bill was equal to more than half of Melissa’s annual income and three months of care for Marilyn, according to the complaint. Once she was told of the taxes, Melissa contacted Izaguirre, who allegedly responded: “I can’t force people to invest” and provided no additional assistance.

“This particular broker gave short shrift for what was a nominal account for him and in a nutshell, didn’t explain implications and didn’t follow up with [the client] to fix the problem,” said Green’s attorney, Jon A. Jacobson of West Palm Beach-based Jacobson Law.

LPL argued in its answer to the complaint that the case was “meritless,” contending the CD held by Marilyn Green was not an investment and, even if it were, Izaguirre and LPL had nothing to do with the purchase or maintenance of it.

“This meritless claim is little more than an attempt by the claimants to have LPL pay their tax bill because they failed to act in a timely manner. … A tax bill that has no connection to an LPL account, where the funds relating to the transaction were never deposited or custodied by LPL,” the firm wrote.

The arbitration panel found that the Greens adequately proved they had an actual and implicit business relationship and position of trust with Izaguirre and LPL and that was breached when Izaguirre failed to fully inform them of the adverse tax consequences of closing the IRA CD and transferring the funds to a personal checking account.

Additionally, the arbitrator denied Izaguirre's request to have the incident expunged from his record. In addition to the case filed by the Greens, Izaguirre has a disclosure event related to a 2010 customer dispute involving an alleged misrepresentation of a mutual fund investment that was settled.

Jacobson said Tuesday that the award of damages, treble damages and attorney’s fees was more than he expected, adding the case must have struck a note with the arbitrator. “The client, Melissa, didn’t know anything; she was so over her head,” he added.

“There’s a concentrated effort in the industry, arbitrators, firms, FINRA and state regulators to become better educated and more sensitive about age issues,” Jacobson said.

Full Article & Source:
LPL to Pay Treble Damages to Elderly Client