Stoltmann Law Offices Wins $1.2 Million FINRA Arbitration Award Against William Blair & Co. | Chicago Securities Fraud Attorneys Investment Arbitration Law Firm

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Wednesday, November 18, 2009

Stoltmann Law Offices Wins $1.2 Million FINRA Arbitration Award Against William Blair & Co.

This week FINRA announced Stoltmann Law Offices tagged Chicago based brokerage firm William Blair and Co. for $1.2 million. The case involved a classic case of the financial exploitation of the elderly. The firm and its advisors defrauded our 90 year old client out of over $1 million by trading her account and creating a bogus email account to cover up their fraudulent conduct. The Chicago Daily Herald did a wonderful story on the case below.

As baby boomers continue to age, we expect to see cases involving the financial exploitation of the elderly to skyrocket. Claims involving fraud, conversion, unsuitable investment recommendations and uauthorized trading are at near record highs this year and we expect this trend to continue over the next 10 years.

Andrew Stoltmann
Stoltmann Law Offices
10 S. LaSalle, 35th Floor
Chicago, IL 60603
312.332.4200


Inverness widow wins $1.1 million in lawsuit against brokerage firm
By Anna Marie Kukec Daily Herald Staff
Published: 11/18/2009 12:02 AM Updated: 11/18/2009 12:20 AM

A 90-year-old self-made millionaire won about $1.1 million from a Chicago brokerage firm and two brokers accused of churning her longtime stock account.

Josephine DesParte, of Inverness, won the case arbitrated through the Financial Industry Regulatory Authority, known as FINRA, the organization that oversees brokerage firms nationwide. The panel decided that DesParte should recover her stock losses of $655,146, all capital gains taxes paid by the liquidation of long-held stocks of $380,000, and the return of $82,719 in fees that the brokers had charged. Attorney fees and punitive damages were not awarded, according to a FINRA document late Monday.

"I'm happy. I just wanted what I lost," DesParte said Tuesday. "And that's what I got. I didn't pursue punitive damages. I didn't care about that."

DesParte's lawyer filed the complaint earlier this year against William Blair & Co. LLC, which was accused of breach of fiduciary duty. William Blair's spokesman declined to comment. The two brokers, William H. Ross and Brian L. Kasal, have since joined another brokerage firm in Chicago and did not immediately return phone calls. The lawyer representing William Blair and the two brokers, Phillip M. Goldberg of Foley & Lardner LLP, declined to comment.

The FINRA document said the company and the brokers denied the allegations and denied they violated any laws.

FINRA also ordered William Blair and both brokers to pay about $8,400 in fees related to the hearings. They have 30 days to pay the award to DesParte, unless they decide to challenge it in federal or state court, according to FINRA documents.

"I think this was a clear case of elder abuse," said DesParte's attorney Andrew Stoltmann of Barrington Hills. "The firm and its brokers were caught with their hand in the cookie jar and they were hit hard. It is a victory for the financially abused. The financial exploitation of the elderly is extremely prevalent and serious. As baby boomers get older, this problem will increase dramatically."

DesParte, a former administrative assistant for some area companies, never earned a college degree and instead taught herself how to invest. She and her salesman husband, Tom, eventually became worth millions of dollars. He died in 2004.

In late 2007 when she was 88, DesParte handed over the management of her portfolio - including stock in three companies she held tightly for about 50 years - to her longtime broker and his boss at William Blair. Within months, according to the complaint she filed, the widow lost about $1.4 million - all before the stock market crashed last year.

She discovered through her tax accountant that William Blair amassed thousands of dollars in fees and capital gains taxes. She also complained that William Blair sent her monthly statements to a Yahoo e-mail address established in her name, although she had never owned or used a computer in her life. She then stopped the churning of her portfolio, changed brokerage firms and hired an attorney.

The brokers' monthly statements and confirmations would have been the only way DesParte would have known her account was being churned. But those statements were sitting in cyberspace, a place where she never went and didn't know anything about, Stoltmann had said.
Stoltmann said people must double-check the activity in their accounts.

"If a client has been taken advantage of, legal options exist and many times the losses can be recovered," Stoltmann said.