Sometimes investors are harmed not only by the brokerage firm that sold a particular product, but also by a supporting or contributing Wall Street player. However, investors who are indirectly harmed by the actions of a brokerage firm often have to pursue the wrongdoers in court versus seeking redress in arbitration. While court may often be preferable to securites arbitration, Vernon Litigation Group looks at each client’s case individually and assesses the best venue to pursue each client’s claim.
For example, Vernon Litigation Group won the right for a large goup of investors who suffered losses based on faulty research and data provided by Goldman Sachs to pursue Goldman in arbitration versus court.
Goldman Sachs tried to persuade a judge that Vernon Litigation Group’s clients should not be allowed to seek to recover their losses before a securities industry arbitration panel because they were not direct customers of Goldman’s. That’s despite the fact that Vernon Litigation Group’s clients had suffered significant losses based on false information that Goldman Sachs sold to their financial advisor, who worked for the Midwest-based firm of Robert W. Baird & Co.
Goldman Sachs’ attorneys claimed that because Vernon Litigation Group’s clients were not direct clients of Goldman’s, they had no right to seek arbitration before the New York Stock Exchange (which is now part of FINRA arbitration). Goldman Sachs’ attorneys also argued that the client agreements with Robert W. Baird & Co. provided that Goldman’s research and databases were for the firm’s use only. The agreement further prohibited Robert W. Baird & Co. from saying that the information came from the Wall Street firm. It also indemnified Goldman Sachs from any claims that might arise from the use of the research and databases.
Despite those arguments, U.S. District Judge John Steele sided with Vernon Litigation Group’s client and allowed the arbitration to go forward. Federal Judge Steele even suggested that the indemnification portion of the contract that Goldman Sachs used in its argument was in place precisely because Goldman Sachs expected that Baird would use the research when advising clients on stock trades.
In this case, the investors and their financial advisor did what they were supposed to do, Vernon argued, but it was Goldman Sachs that acted to fill its own coffers at the expense of Main Street investors.
At the heart of Goldman’s actions were those of its analyst, Jamie Friedman, who had strongly recommended Internet Capital Group Inc. (ICGE) stock to the financial advisor who in turn recommended ICGE to his clients, including the investors subsequently represented by Vernon Litigation Group. Despite the fact that ICGE stock’s value was tumbling, Friedman reassured financial advisors that ICGE was still a good investment and that it was undervalued.
It is worth noting that Friedman was also implicated in the boiler-room style sale of another Internet stock that Goldman Sachs pushed to its clients, driving up the price, while Goldman sold its shares of the company. When the bottom fell out, Goldman had profited while investors who had bought the stock suffered heavy losses.
This case is an example of how Vernon Litigation Group attorneys bring their decades of experience to the table to assist clients with critical, customized analysis of the best available forum to pursue each particular client’s claim. Vernon Litigation Group attorneys have litigation and arbitration experience in advocating for investors claims to be heard in the forum it believes is most likely to benefit the investor.
The attorneys at Vernon Litigation Group have decades of experience representing investors who are victims of stock fraud and stock losses due to broker fraud and brokerage firm fraud and misconduct. Vernon Litigation Group securities attorneys are experienced in securities arbitration and business litigation and assist clients in recovering losses caused by all manner of financial fraud and negligence.
Vernon Litigation Group
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
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