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FINRA orders former advisor to pay $1.66M to client for unsuitable investments

On Behalf of | Jan 9, 2023 | Investment Loss

A panel of Financial Industry Regulatory Authority arbitrators issued an award to a retired New Jersey teacher who filed a claim against her former advisor over her investment losses, Financial Advisor reports.

The FINRA panel ordered the former registered investment advisor, Bridget Fernandez of Plymouth Meeting, Pennsylvania, to pay a total of $1.66 million to Marianne Antczak.

Antczak accused Fernandez of making unsuitable investments on her behalf, saying the advisor had put her life savings into daily leveraged 300% gold bull ETFs. From 2012, when Fernandez began the investments, until 2016, when Antczak stopped any further trades for her by Fernandez, the value of her accounts had dropped from nearly $715,000 to $26,842.

Antczak initially filed a federal lawsuit against Fernandez, her firm Ultimate Financial Investments, and the brokerage custodian Fernandez used, TD Ameritrade Clearing. She later dropped the class action lawsuit and brought her allegations to the FINRA arbitrators.

Among Antczak’s charges were breach of fiduciary duty, negligence, breach of contract, breach of the duty of good faith and fair dealing, and civil conspiracy regarding investments in exchange-traded funds.

Fernandez first advised Antczak when she worked at UBS Financial Services before inviting Antczak to join her when she formed her own firm, Ultimate Financial Investments (UFI). Antczak’s lawsuit accused Fernandez of “basically gambling away the funds” of conservative, long-term investors in unsuitable vehicles, and alleged that “UFI’s pattern of using margin, buying options, buying options on daily leveraged 300% gold bull ETFs, selling quality investments at a loss and increasingly moving UFI clients’ money into larger and larger buy-and-hold positions primarily in two daily leveraged 300% gold bull ETFs was sheer lunacy.”

In issuing its award, the arbitration panel noted that punitive damages are not usually awarded in FINRA arbitrations with the exception of egregious, reckless conduct by a brokerage firm or financial advisor. It determined that in this case, “Fernandez’s conduct was indeed egregious.”

As a result, Fernandez was found to be liable for $687,944 in compensatory damages; $297,222 in monthly compounded pre-judgment interest; post-judgment interest of 6% a year until the award is paid; $500,000 in punitive damages; $3,155 in costs; and $174,338 in attorneys’ fees.

The arbitrators added that because Fernandez did not appear at the 15 pre-hearing and hearing sessions, the panel had no choice but to consider the evidence against her as fact and said the evidence presented by Antczak was sufficient to prove that Fernandez should be held liable.

Lewitas Hyman routinely represents investors nationwide who were harmed when financial professionals and their firms breached their fiduciary and other duties. We bring a unique level of knowledge when representing the rights of investors. We have a depth of experience resolving cases through various means, including arbitration and litigation when necessary. If you were the victim of a breach of fiduciary or other duties owed to you by a financial professional or financial firm, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter.