Dropbox co-founder Arash Ferdowsi filed a lawsuit alleging that an advisor at J.P. Morgan Private Wealth Advisors recommended investments that were improper and unsuitable, Advisor Hub reports.
The complaint, filed last week in U.S. District Court for the Northern District of California, seeks over $225 million in damages. Ferdowsi asks the court to allow him to pursue a Financial Industry Regulatory Authority arbitration against J.P. Morgan Private Wealth Advisors, J.P. Morgan Securities and advisor Arif Ahmed without interference from the lawsuit’s two defendants — JPMorgan Chase Bank and the Federal Deposit Insurance Corp. as receiver for the failed First Republic Bank. J.P. Morgan Private Wealth Advisors absorbed First Republic when it was sold out of government receivership in May 2023.
Ferdowsi, chief technology officer at file-hosting service Dropbox until 2020, alleges that Ahmed steered him into complex, low-performing investment vehicles with exorbitant embedded fees that were fifteen times higher than the advisory fees that Ferdowsi and Ahmed had agreed upon. “These investments were selected for no legitimate investment purpose, but rather because they allowed JPM Wealth to extract over $40 million in hidden fees that it then shared with Ahmed,” Ferdowsi and his revocable trust allege.
Ferdowsi’s complaint in the Financial Industry Regulatory Authority’s arbitration forum claims breach of fiduciary duty, securities fraud and negligent supervision.
According to the complaint, Ahmed allegedly traded $1 billion worth of “highly complex” market-linked investments with commissions as high as 3.75% that underperformed a basket of large cap technology stocks by $225 million. Ahmed was accused of encouraging frequent trading in the products to boost his commissions.
Ferdowsi also alleges that Ahmed “lied in response to direct questions from Mr. Ferdowsi about the fees, contending that the fees were retained by the banks issuing the MLIs when, in fact, they were paid to JPM Wealth,” according to the arbitration claim.
A JPMorgan spokesperson declined to comment and Ahmed did not immediately return a request for comment, AdvisorHub reported.
Ahmed began his financial services industry career in 1998, registering with Merrill Lynch, and was registered with First Republic Securities from 2019 to September 2023, when the firm became part of J.P. Morgan Private Wealth Advisors following J.P. Morgan’s acquisition of First Republic Bank in May that year, according to BrokerCheck.
Hyman Cotter PC routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. If you think your financial professional or firm engaged in misconduct that caused investment losses, contact the Chicago investor fraud attorneys of Hyman Cotter PC to schedule a free consultation by calling 312-291-4600 or through our online contact form.
