President Bush's Uncle Loses Securities Arbitration Case
President Bush's uncle, money manager Jonathan J. Bush, has come out on the losing end of an arbitration hearing that two former clients launched against him.
Jonathan Bush, who runs the J. Bush & Co. money management subsidiary of Riggs National Corp., was accused of putting the two clients in unsuitable investments and misrepresenting the risk associated with his firm's stock portfolio recommendations.
The firm, which caters to wealthy investors, and Jonathan Bush himself were ordered to pay more than half a million dollars to the former clients by a National Association of Securities Dealers panel.
The former clients - Washington-based architect Warren J. Cox and his wife, Claire - claimed that when they approached Bush for portfolio advice in 2000, they told him that they wanted to maintain a conservative portfolio but to obtain a higher return than they had been able to achieve on their own.
Bush's firm, which at the time was focusing on technology, health care and telecommunications stocks, assured them that they could hold a conservative portfolio in these sectors through careful stock selection, and presented them with a written handout detailing the conservative model, according to the couple's attorney, Edward B. Lowry.
Calls seeking comment from Riggs, Jonathan Bush and his attorney weren't immediately returned.
An analysis of the couple's portfolio showed that it was actually two-and-a-half times more volatile than the Standard & Poor's 500 Index, said Lowry.
The original $4 million portfolio went on to have a 55.7 percent out of pocket loss by the time the couple ended their relationship with Bush in 2001, a little over a year after they had first hired him.
The Coxes sought $2 million in damages from Bush; the NASD panel awarded them $630,000.
Bush, who is in his 70s, appeared at the hearing and testified, said Lowry, the Coxes' attorney. He said Bush, the brother of former President George H.W. Bush, was "pleasant" and honest during his testimony.
Bush and his firm didn't deliberately set out to mishandle the Coxes' account, "but he was clearly wedded to these sectors of the market long after he should have reacted to changing market conditions," said Lowry.
The arbitration hearing was unrelated to a money-laundering scandal at parent firm Riggs National, which purchased Connecticut-based J. Bush & Co. in 1997.
In January, Riggs pleaded guilty to violating the Bank Secrecy Act in connection with Riggs Bank accounts controlled by former Chilean leader Gen. Augusto Pinochet and others. (Agencies)