Oppenheimer Loses $1.1M FINRA Arbitration in Denver

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Denver CO has found Oppenheimer & Company liable and ordered them to pay the co-founder of Boston Market Corporation $1,112,500 in compensatory damages for excessive trading (churning) in his account. Steven Kolow co-founded Boston Chicken with his college friend Arthur Cores, from Northeastern University in Boston. The two started the business, which featured home style cooking with recipes from their mothers, in Newtown, Massachusetts in 1985. Then in 1995, it became the Boston Market Corporation and was purchased by McDonalds in 2000.

The claim was filed in July 2010 alleging various causes of action, including breach of fiduciary duty, negligence, negligent supervision, churning and the violation of state and federal securities acts, among other things. All causes of action related to the trading of shares of Alcoa, GVI, General Electric, Freeport-McMoran, Exco-Resources and call options of General Electric, Freeport-McMoran and Exco- Resources. The relief requested was for damages in excess of $4,000,000. The Respondent, Oppenheimer, likely claimed that Mr. Kolow was a highly successful businessman, a sophisticated investor and was fully aware of how his account was being handled, although the award did not speak to their allegations.

Interestingly, at the beginning of the evidentiary hearing counsel for the Claimant requested that the broker who handled the Kolow account, Mr. Loren Ben, be excluded from the hearing during the times he was not testifying. Typically, this is done to prevent the witness from hearing the testimony from other witnesses and be able to better prepare for his own testimony and/or cross examination.

Following the three (3) day evidentiary hearing, the FINRA arbitration panel retired into executive session to review and evaluate the oral and documentary evidence presented during the hearing. After having done so, the panel reached its decision and concluded that Oppenheimer was liable to Steven Kolow and ordered them to pay him $1,112,500 in compensatory damages, plus post judgment interest at the rate of 9% per annum on the $1,112,500, from the date of the service of the award until it is paid in full. Awards are due and payable within thirty (30) days from the date that the award is served on the parties. The $10,800 in forum fees for the arbitration was split equally between the parties, as each side was assessed with $5,400 in fees by the panel. (FINRA# 10-03410; Steven Kolow v. Oppenheimer & Company Incorporated).

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