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A FINRA Arbitration Panel Awards $30 Million To US Airways For Oppenheimer’s Sale of Structured Private Placements In Auction Rate Securities

Recently, on January 31, 2013, a Financial Industry Regulatory Authority, Inc. (“FINRA”) arbitration panel issued an arbitration award to U.S. Airways, Inc. (“US Airways”) for $30 million in compensatory damages against Oppenheimer & Co. Inc. (“Oppenheimer”), its broker, Vincent Woo (“Woo”), and third-party Respondents Deutsche Bank Securities, Inc. for sales practice abuses related to structured, private placement auction rate securities, also known as ARS. See US Airways, Inc. vs. Oppenheimer & Co., Inc. and Vincent Woo vs. Deutsche Bank Securities, Inc. and Deutsche Bank AG, FINRA Case No. 09-00878. On February 17, 2009, US Airways filed a Statement of Claim against the broker-dealer Oppenheimer and its broker, Woo. The Statement of Claim alleged the following causes of action against Oppenheimer and Woo: breach of contract; unsuitability; unauthorized purchases; violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act; fraudulent misrepresentation; conversion, negligence; gross negligence; breach of fiduciary duty; and failure to supervise in connection with the sale of structured, private placement auction rate securities. On July 10, 2009, Oppenheimer and Woo filed an Answer denying the allegations contained in US Airways’s Statement of Claim, and asserted various affirmative defenses. On July 10, 2009, Oppenheimer filed a Third-Party Statement of Claim against Deutsche Bank Securities, Inc. and Deutsche Bank AG alleging the following causes of action: violation of Section 10(b), 15A(b)(3) and 20(a) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder; FINRA Rule 2010; breach of settlement agreement; fraudulent misrepresentation; negligence misrepresentation; common law negligence; contribution and indemnity; and unjust enrichment. Oppenheimer and Woo’s Third Party Statement of Claim requested that the arbitration award specifically state that Oppenheimer reasonably relied on the representations of Deutsche Bank Securities, Inc. and Deutsche Bank AG regarding the integrity of the auction rate securities at issue. In response, on October 2, 2009, Deutsche Bank Securities Inc. denied the allegations in the Third Party Statement of Claim and asserted various affirmative defenses. Deutsche Bank AG is not a member firm associated with FINRA, and therefore did not appear in the arbitration and did not voluntarily agree to arbitrate before FINRA. As such, the FINRA arbitration panel made no determination regarding any claims against Deutsche Bank AG. After 127 hearing sessions, spanning from September 2011 through December 2012, a FINRA arbitration panel held Oppenheimer, Woo and Deutsche Bank Securities, Inc. jointly and severally liable to US Airways in the amount of $30 million, with Woo’s liability not exceeding the commissions he received.

Lax & Neville LLP can effectively assist investors, on both a regional and national level, that may have suffered losses as a result of their broker dealer’s sales practice abuses, including losses suffered as a result of investments in private placements and/or auction rate securities. Please contact our team of securities fraud attorneys for a consultation at (212) 696-1999.

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