Michael Farah, a broker formerly associated with the investment firm Wedbush Securities, Inc. (“Wedbush”) won a $4.2 million Financial Industry Regulatory Authority (“FINRA”) arbitration award against the firm regarding Farah’s former sale of risky collateralized mortgage obligations. According the arbitration award, in his Statement of Claim filed in 2005, Farah alleged that “Wedbush made misrepresentations and omitted material facts in connection with the collateralized-mortgage-obligations [“CMO”] investments that he recommended to his clients, causing Farah to lose clients and annual income.” Thereafter, in 2012, Farah amended his claim to include allegations that Wedbush failed to indemnify him in various customer arbitrations raised against the broker-dealer relating to the sale of the CMO investments. In response, Wedbush filed Counter-Claims against Farah alleging the following claims: express indemnification, implied equitable indemnification, interference with contractual relations, interference with prospective economic advantage, intentional misrepresentation, negligent misrepresentation and breach of contract, which all “relate to losses [Wedbush] allegedly suffered as a result of multiple arbitration proceedings arising out of the CMO investments recommended by Farah.” After 15 hearing sessions, the FINRA arbitration panel awarded Farah $1.3 million for loss of income. Further, the arbitration panel found that Wedbush was responsible to pay Farah $1.4 million in punitive damages, $1.47 million for attorneys’ fees, $18,500 for expert witness fees, $21,074 for Farah’s court reporter fees, and $600 for the claim filing fee. The FINRA arbitration panel denied Wedbush’s counter-claims.
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses. Please contact our team of attorneys for a consultation at (212) 696-1999.