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)

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