A legal dispute regarding a real estate deal in Florida gone bad was settled by a FINRA arbitration panel on Monday, with an Orlando couple set to receive $3.1 million from Citigroup Global Markets (C).
The ruling involved a former Smith Barney broker, Scott Andrew King, who directed his clients towards investments in the Florida panhandle touted by the politician Lawton “Bud” Chiles III.
Citigroup “is liable for breach of fiduciary duty as financial advisor to claimants, as well as negligent supervision,” FINRA said in its ruling.
In addition to the $1 million Citigroup must pay Dr. Nasirdin H. Madhany and Zeenat Madhany for direct losses and the $2.1 million it will shell out for legal settlements , the bank is also responsible for up to $10 million if any future claims stemming from two promissory notes tied to the investments: Moorings at Carrabelle, Moorings Development and Pirates Cove Marina.
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“My clients very happy with the verdict,” said Fort Lauderdale-based attorney Jeffrey R. Sonn, in an interview with ThinkAdvisor. “They got all their equity back and coverage for funds to pay for the guarantees, if needed. They are very pleased.”
For its part, Citigroup said in a statement that it “disagrees with the award, which was not supported by the facts or law.” (A call to its attorney was not returned as of press time.)