Investor Awarded Lost Opportunity (or, Market-Adjusted) Damages, Reimbursement of Investor’s Costs, Pre-judgment and Post-judgment Interest
Mansoor Karamooz, Trustee, et al. v. J.P. Morgan Securities (FINRA Arbitration No. 17-00791)
After J.P. Morgan Securities refused to make Dr. Mansoor Karamooz whole for the damages suffered by his three trusts during the five-year period it managed his investments, Dr. Karamooz retained the Law Offices of Montgomery G. Griffin to evaluate the investment accounts and seek a recovery by pursuing a FINRA arbitration. After carefully analyzing the activity that had taken place in his trust accounts over the entire period, the firm prepared and filed a case focused on just three speculative securities: Mannkind Corporation, Alibaba, and SPDR Gold. Dr. Karamooz alleged that his financial advisor, Karl Pettijohn, failed to recommend suitable investments and to adequately monitor his accounts. Financial advisors are required to make only suitable recommendations.
The Arbitrator’s Award of Market-Adjusted Damages, Interest, and Reimbursement of Costs
After the firm obtained panel orders in favor of Dr. Karamooz during the pre-hearing stage of the arbitration by preparing and bringing necessary motions, an 11-day arbitration hearing (trial) was held at FINRA in Los Angeles before a panel of three arbitrators. After listening to both sides’ presentation of evidence, the arbitration panel awarded Dr. Karamooz $211,174.89, which reflected the exact amount of market-adjusted (or “well-managed”) damages the firm’s expert witness presented during the trial in his damages summary for Mannkind and Alibaba, respectively, as well as the costs incurred by Dr. Karamooz and interest on the damages. The case was noteworthy since J.P. Morgan contended—through its outside law firm, Greenberg Traurig LLP—that Dr. Karamooz had suffered no overall losses during the five-year period of investment and that the Law Offices of Montgomery G. Griffin’s arbitration strategy to place at issue only three of the many investments made in the trust accounts amounted to “cherry picking” losses. In fact, all results combined, Dr. Karamooz’s total aggregate losses
(often categorized by Wall Street firms as net out-of-pocket losses, or “NOP”) were just $3,000. However, the accounts, and the three speculative securities placed at issue substantially underperformed stock market averages during the period while the accounts were handled by J.P. Morgan. In making this award, the arbitration panel effectively adopted the damages methodology the Law Offices of Montgomery G. Griffin argued was the appropriate legal standard, as set forth by appellate courts throughout the country, including in California, New York, Texas, and Florida. In accordance with these various significant and longstanding appellate decisions, the FINRA’s Arbitrator’s Guide informs arbitrators that the market-adjusted measure of damages allows the investor to recover the difference between what the investor’s account(s) actually made or lost compared to what a well-managed account, given the investor’s objectives and risk tolerance, would have made during the same time period.
The Firm’s Previous Victories for Other Clients Against J.P. Morgan
Read about the Law Offices of Montgomery G. Griffin’s other victories against J.P. Morgan and its predecessor firms, including (1) the firm’s recovery of losses for another investor before a FINRA arbitration panel in San Francisco in a case where J.P. Morgan was represented by the law firm of Sheppard Mullin LLP, following a six-day arbitration hearing; and, (2) an award against J.P. Morgan’s predecessor firm (Washington Mutual Financial Services, Inc.) for multiple expungement orders in favor of the financial advisor the firm represented through the conclusion of a four-day FINRA employment arbitration in Los Angeles where J.P. Morgan was represented by the law firm of Morgan, Lewis & Bockius.