On September 10, 2010, the Financial Industry Regulatory Authority (FINRA) initiated a regulatory action against Joey Wade Dean, a former Morgan Stanley broker based in Arkansas. FINRA alleges that Dean made significant misrepresentations and failed to disclose important facts to customers in connection with the sale of so-called “principal protected” structured notes. FINRA further alleges that Dean recommended and sold the structured notes without having a reasonable basis to believe they were suitable for the customers, given their financial circumstances and stage in life as well as the associated risks of the securities.
The customers, many of whom were retired or elderly, were falsely told that their principal was protected and guaranteed a fixed annual rate of return, according to FINRA. When the structured notes stopped paying income to customers, Dean, without authorization or even telling the customers what he was doing and why, sold shares to raise cash to allow them to continue to make their accustomed withdrawals.
Similarly situated investors have filed arbitration claims to recover their losses in “principal protected” structured notes with considerable success.
Page Perry, a law firm based in Atlanta, Georgia, is co-counsel with a New York law firm, Deutsch & Lipner, in representing a number of investors in “principal protected” structured note cases. These cases have resulted in significant recoveries for our clients. So far, three separate arbitration panels sitting in three separate cases have ordered rescission of principal protected notes transactions. In other words, the arbitration panels ordered the brokerage firm to buy back the notes at their original cost. Of course, each case stands on its own merits and prior results are not indicative of future success.
“We continue to receive inquiries from investors who acquired structured notes as a result of brokers’ misrepresentations of them as ‘principal protected’ investments,” said J. Boyd Page, a senior partner at Page Perry in Atlanta. “Our legal team continues to investigate and pursue arbitrations on behalf of investors who purchased these products,” he added.