The Financial Industry Regulatory Authority says that BNP Paribas Securities Corp. has to pay retirees James and Margaret Eringer $16.6 million for selling them a leveraged derivative call option, which was not a suitable investment for them. This securities claim, which was brought in 2010, is the longest running case that FINRA has presided over. The arbitration panel finally issued a ruling after over 90 days of hearings.
The Eringers made their money when they sold a bakery business that belonged to one of their parents. The British couple spent about 60% of their investible assets on the investment in 2007.
According to their securities attorney, they made the purchase through Ontonimo Limited, which is a corporate entity that BNP Paribas mandated they create since the firm could not directly sell this kind of security to retail investors. This type of investment product is usually sold to institutional clients and hedge funds.
The Eringers paid BNP over $2 million for costs and fees. The firm also purportedly made James Eringer sign an agreement indicating that he was an investment adviser himself even though he had no professional financial experience nor did he have a securities license. Within 18 months, the Eringers’ contend, their investment became “worthless.”
The FINRA arbitration panel found BNP Paribas Securities liable for civil fraud and gross negligence. The award includes compensatory damages in the full amount that the couple had asked for plus interest, legal fees, and a sanction against BNP Parabas. The firm is also accused of not complying with the self-regulatory organization’s order about exchanging information with the claimants during the case proceedings.
Not every investment is suitable for retail investors. When an investor gets involved in securities that are too risky for his/her portfolio, significant losses may result. Elderly investors who are no longer bringing in an income are especially vulnerable to the consequences of investment losses at the later stages of life. That’s why it is so important that they get involved in securities that are not too risky or volatile.
Our senior financial fraud lawyers have worked with older investors throughout the US who were wrongly or negligently advised by a financial representative about their investment portfolios and sustained huge losses as a result. Contact Shepherd Smith and Kantas, LTD LLP today.
Finra arbitrators award couple $16.6 million from BNP Paribas, Investment News, June 30, 2015
BNP Paribas Customer Awarded $16.6 Million in Finra Dispute, Bloomberg, June 30, 2015