A Financial Industry Regulatory Authority arbitration panel on Thursday ordered Chicago broker-dealer PTI Securities & Futures to pay $127,500 in compensatory damages plus legal costs to an elderly customer after one of the firm’s brokers made unsuitable and reckless investments on her behalf, according to FINRA.
PTI and Gregg Rzepczynski & Associates, the Chicago law firm representing it, did not immediately respond to requests for comment Friday, one day after the FINRA Office of Dispute Resolution posted the award on the regulator’s website.
The claimant — Martin Birnbaum, power of attorney for Yonata Berman — asserted multiple causes of action in the dispute, including violations of the Illinois Security Act of 1953, violations of the Illinois Elder Abuse and Neglect Act, breach of fiduciary duty, negligence, negligent supervision, breach of contract and unjust enrichment.
The claimant alleged that PTI broker David Aaron Andalman “recklessly invested Claimant’s funds in unsuitable investments in disregard [of] her age, risk tolerance and income needs.” Also claimed was that Andalman “engaged in high-volume trading of risky equities, exchange-traded funds and options on margin, which resulted in Claimant suffering significant financial damages.” The claimant also accused PTI of failing to supervise the broker properly as it related to the handling of Berman’s investment account.
In a counterclaim, Andalman said Birnbaum was given power of attorney over Berman’s financial affairs and that he had breached his fiduciary duties to her. Andalman also alleged Birnbaum made no effort to notify the broker of Berman’s “purported health issues, never followed up with Andalman or objected to the trading” in Berman’s account. Andalman also requested that the FINRA arbitration panel require Birnbaum to contribute to any monetary damages if it opted to find liability and award damages.
The FINRA panel apparently ended up taking that into account. Although the panel found Andalman liable and ordered him to pay the claimant $42,500 in compensatory damages, it also found liability on the part of the claimant, who was ordered to pay Andalman $21,500 in compensatory damages, effectively reducing the compensatory damages Andalman must pay to $21,000.