JPMorgan Ordered to Pay Family Trust Over $1M Related To Purported Violations Involving Short Trading, Leveraged ETFs and Ex-Firm Adviser Must Pay $22M for Fraud

A Financial Industry Regulatory Authority panel has awarded The Elliot Family Trust DTD, Eugene Elliot, Genraza LLC, and Shawn Elliot Over $1M in their securities arbitration case against J.P. Morgan Securities (JPM).

The claimants are contending fraud, breach of fiduciary duty, misrepresentation and omissions, failure to control and supervise, and violations of federal and state securities laws related to the alleged short trading of US Treasury securities and the unsuitable purchase and allocation of securities, including leveraged exchange-traded funds and unspecified options. They had initially sought compensatory damages no lower than $1.75M, rescission of the purportedly unsuitable investments, punitive damages, legal fees, and other costs. Meantime, the financial firm sought to have their case dismissed.

Following the pleadings, the FINRA arbitration panel decided that the respondent is liable for and must pay claimants over $1.145M in compensatory damages, interest on that amount, and over $43,000 in other fees.

In other JPMorgan news, one of its former investment advisers has admitted to stealing about $22M of clients’ money. Michael Oppenheim entered a guilty plea in Manhattan for charges of securities fraud and embezzlement.

Federal prosecutors claim that Oppenheim bilked a number of wealthy clients over several years. He claimed that their funds were in low risk municipal bonds and sent clients account statements that had been fudged to make it appear as if their investments were making money. Instead, Oppenheim was using client funds to cover his living expenses, his gambling, and repay other investors.

The government says that the ex-broker persuaded clients to take out hundreds of thousands to millions of dollars out of their accounts. Rather than placing the funds in low-risk muni bonds that the bank was supposed to hold, Oppenheim used the funds to get cashier’s checks, using the funds for his own purposes.

It was JPMorgan that notified the Federal Bureau of Investigation of the fraud. Oppenheim was let go from JPMorgan last March. The SEC has a pending civil case against him.

J.P. Morgan Adviser Admits Stealing $22 Million From Clients, Wall Street Journal, November 5, 2015