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FINRA Orders RBC Capital Markets To Pay Investor Losses For Misrepresentations Made Regarding Lehman brothers

On May 29, 2013, a Financial Industry Regulatory Authority, Inc. (“FINRA”) arbitration panel issued an award against RBC Capital Markets, LLC (“RBC”) regarding misrepresentations made to investors concerning the collapse of Lehman Brothers. See Russell Rupp and Linda Rupp vs. RBC Capital Markets, LLC – FINRA Case Number 11-03927. In October 2011, Russell and Linda Rupp (“Claimants”) filed a statement of claim against RBC alleging breach of fiduciary duty, negligence, negligent supervision, fraud and breach of contract. Claimant’s causes of action related to Lehman Brothers preferred stock and other fund securities. RBC denied the claims asserted in the statement of claim. After 4 days of hearing, the FINRA arbitration panel awarded Claimants approximately $300,000 in compensatory damages regarding their Lehman Brothers preferred stock investments, as well as interest. The arbitration panel also awarded Claimants an additional $300,000 in compensatory damages for their losses in the other securities at issue in this matter, namely PowerShares Financial Preferred closed-end fund, Alpine Dynamic Dividend Fund and Alpine Total Dynamic Dividend Fund. Most importantly, the arbitration panel found RBC liable to pay Claimants punitive damages in the amount of $250,000. According to the FIRNA award, the arbitration panel “determined that [RBC] falsified the Customer Questionnaire as to the risk level that the customer had agreed to and misrepresented that the U.S. government would not allow Lehman Brothers to fail.” See Award, page 3.

Lax & Neville LLP has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses concerning the collapse of Lehman Brother. Indeed, Lax & Neville LLP is currently prosecuting an investor claim against RBC based upon misrepresentation made to investors regarding the credit risk of Lehman Brothers. Please contact our team of attorneys for a consultation at (212) 696-1999.

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