A California dermatologist has filed an arbitration claim against JPMorgan Chase & Co. over the losses he sustained in his account following the start of the pandemic, reports AdvisorHub.
The action was brought by Founder Holdings, Inc., the holding company for a dermatology group founded by Greg S. Morganroth, the Chief Executive of the California Skin Institute.
In his claim, Morganroth cited what he called the unapproved stock market timing strategy implemented by his J.P. Morgan advisor. The advisor liquidated the stocks in Morganroth’s aggressive growth account amid the stock market downturn in the early days of the pandemic, and kept most of his portfolio in cash or fixed income for the next year. Morganroth said this strategy caused him to miss out on substantial gains when the markets recovered and soared later in 2020 and in 2021. He added that he had repeatedly contacted the advisor to complain about the management of his account.
Morganroth’s claim filed with the Financial Industry Regulatory Authority alleges breach of fiduciary duty, misrepresentation and fraudulent concealment, and says that J.P. Morgan failed to properly supervise the advisor involved. The claim seeks $7 million in damages consisting of account losses, unearned management fees, attorneys’ fees, interest, costs, and punitive damages.
J.P. Morgan asserts that the advisor converted Morganroth’s account to cash and fixed income upon his instructions when the client became concerned about the market’s volatility. The firm added that while Morganroth had regrets about the selling of his stocks, he never expressly directed the broker-dealer to shift his portfolio back into equities. J.P. Morgan has filed its own complaint in U.S. District Court for the Central District of California that seeks to have the dispute taken out of arbitration and moved to court.
Morganroth serves on the board of directors for publicly traded advisory firm acquirer Focus Financial Partners.
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