Arbitrators for the Financial Industry Regulatory Authority have ruled in favor of a retiree who filed a complaint against Charles Schwab and RIA Pinnacle Associates, according to a report by ThinkAdvisor.
The three-member arbitration panel issued its decision on behalf of Maria Fernbach, who said she suffered losses in her portfolio as the result of an options strategy that forced her to sell hundreds of shares of Apple stock. Under the FINRA award, Charles Schwab and Pinnacle were found jointly and severally liable and were ordered to pay Fernbach $436,110 in compensatory damages, interest on that sum at the rate of 9% a year from the date of the award through the date it is paid in full, $304,500 in attorneys’ fees, and $74,400 in other costs, for a total of $815,010.
In addition, Pinnacle was ordered to reimburse Charles Schwab for its portion of the award and to pay the firm $352,000 in attorneys’ fees.
The complaint by Fernbach about the laddered covered-call writing strategy was first filed in December 2020. In July 2021, she filed an amended complaint alleging fraud, omissions and misstatements, common law fraud, fraudulent inducement, breach of fiduciary duty, negligence, failure to supervise, breach of contract, breach of covenants of good faith and fair dealing, and violation of New York General Business Law Article 22-A. The claims were denied by both companies. Fernbach’s amended statement of claim had requested at least $908,982 in compensatory damages and unspecified punitive damages.
In a statement responding to the decision, a spokesperson for Charles Schwab was quoted as saying, “As always, we work to deliver exceptional experiences to all our clients and serve them as a trusted partner along their financial journeys.”
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