far the case below is a contract dispute over investor agreements and the issues at play should have been and are what the meaning of those contract terms are  of making that investment he signed several contracts account opening documents margin documents and other contracts discussing in clear language that he would be authorizing the trading of options on margin but he had spoken to his investment in that same sentence after i was sentenced what i just rather it's appendix page sixty paragraph wait a minute i'm looking at the agreement they granted for investment management services yes now i don't what do you documents signed with the custodian tedium but let me give you a hypothetical i'm i'm concerned about the same thing george poacher suppose after receiving his first statement showing options trading or the patel cal up walk out and says i do not wish to trade options please invest all of the money in a money market fund you could waga have said i'm sorry you've already signed away your ability to make that choice this is an integrated contract and you can't change your mind and hung up could have done that i mean keeping in mind that would he have done on our side no you're on he could not  objectives are at any moment right there's no arguing that i will at one look at there there is your whole argument is that this is an integrated contract and therefore any evidence of oral statements like i want a safe investment you have to be ignored well to be consistent you then have to answer my question by saying no he couldn't do that because it's an integrated contract that position because it's not consistent with the portions of the contract allowing the investor to give directions right but the contract says that those directions that you communicate in writing and that answers the problem of integration because she sorry should the investor then you had to answer my questions saying while ago could have said i am going to ignore your direction it does not comply with the contract i understand i apologize your honor the answer to your question is unless those changed instructions are communicated in writing waga could ignore those world statements would you think this is an integrated contra i do your honor then there's no integration clause so that the law imposes obligations i agree and understand that account advisors and every discretionary count would be disintegrated because every discretionary account advisor has an obligation to have conversations continuing con conversations their clients about their goals and objectives and to manage the account subject to those conversations so that if that alone were enough to disintegrate this contract it would disintegrate every investment advice one of the investment objectives and goals will tell the log in time to time what his  well know there's there's several closets here that bear on that question but but the first thing i would like to say is that there is a clear reference where the investment objectives set forth in the contre in the custodian documents that are referenced in this agreement so  there's so what's an example so an example would be the client options account agreement a pair on the client options account agreement paragraph four which is just paragraph four  same agree no no it's one of the custodian documents that's referenced in the investment so what is paragraph four signed it says i represent that i have discussed my options information and the suitability of trading options in my account with my advis explained to me the type of options trading that corresponds each level below based on these conversations my advisor and i have determined that don't sound like an integrated contract that sounds like a specific reference to oral exchanges which are then incorporated into the agreement in this writing are they all written down everything the hotel said written down i couldn't find that well you're under there actually one of the problems here is write and then come the trial patel wants to show the jury what it was concretely that they discussed orally how was the writing stating we discussed something orally incompatible with that because the writing also states what they discussed and what what implications that had where does it state what they discussed when it was where does it state patel's decision on the rich were term trade off it says that based on th refers to oral discussions saying we've discussed investment objectives that's fine but it doesn't say what the discussion was done somewhat on and then come the trial the plaintiff wants to show contract it's one thing to introduce oral testimony to clarify or percs found upon what those conversations were substantively but here the oral testimony by patel was that he never discussed these types of risk grammars with the advisor he never received  which are you stated here with which he he signed a contract saying i received these disclosures and create agreed to these risks rammer so so we have two problems i mean the first is the problem of integration the second is that the use of the testimony here the testimony was used to attack the terms of the contract not to clarify it but look you have you have this satellite or from patel in which about a so concerned what happen to my account of this and that and the response by your client was your worry and anger are just d sound as if he agree with with patel that he had or at least would be possible for a jury to conclude that waagner was agreeing with patel stock market has ups and downs and to stick with me and these are the market reasons why your account went down and it's clearly stated here but you're now making it sound like an element of fraud it's a standard wall and device when the fraudster is caught out the  fraudsters tries to wall the client into leaving the money with them for a little longer i think is that really the position you want to you know i'm just saying as an experience investment adviser he knows that the market goes up and down and he's identified exoticness factors here then why does he say you were and especially your anger at what why did you say your anger i just died if this is just some normal swing you know and not to worry about it  surely anybody who has just lost a large sum of money would be worried and angry and i think there's no knowing if patel's argument what the jury obviously believes is that he had told long ago he wanted a safe investment conceptualize seto's so they don't want investment it was going to move with the market short right and he discovers that the that his broker has made a beta three investment goes up three times as fast as the market goes down three times as fast right if if he had made a beta one investment and it just gone down with the market there's nothing to apologize for that's just the market goes up the market goes down but if you make an investment that goes down three times as fast as the market or four times as fast as the market and the market goes down then you've got something to apologize for and this does seem a letter of apology that's what this case is all about your have acquired a wanted  went up when he saw one hundred sixty two thousand dollar profit in a month and a half a million dollars that's meant he didn't say stop investing my account in high risk options and when he had pie charts on his statement that showed most of the money in options this is a man with a college degree  sophisticated businessman it's very hard to explain i mean we have documents that you received and read and testified that he received a man with a college degree doesn't necessarily know what beta means when talking about market trends are sure but he understood risk enough to testify a trial that could be on the show is he but he understood risk and reward enough to testify at trial that he knew he couldn't receive that kind of return in a month without a risky strategy he said that a trial and it's stands to reason so he only complained after the money and complete responsibility and the problem then was that the you know give him a cent back that he basically said to the account will come back it was rapidly defunded drolly they're after because patel removed money but what was left did come back depreciate significantly and it's speculation whether the account would have come back had he left the money and but i think what he's saying is you've just lost a lot of money you're worried and very justified these are the market factors i don't think that's what this well did he get his money he he asked for the money back and got it back what was in the account but what was left what was left it's with us two hundred thousand dollars and there right he lost going down to put in five hundred thousand and got back three hundred those or something like that he got back on broker the advisor waka some discretion to make the investments in line with what mr patel wanted in addition to that his mr patel's investment objectives what is he seeking to accomplish what mr patel's investment objectives were the problem with that as the panel's pointed out is that the client investment objectives are mentioned throughout the country documents that very first paragraph of the cli il in discussing this paragraph says well there are other other agreements that need to be looked at and there are several other agreements there are agreements the talk about options patel signed off and gave approval to trade not that doesn't mean  people pointed out that doesn't mean that he said full speed ahead let's throw five hundred thousand dollars in options and see how this works out for me it's not inconsistent to say i'll give you thirty trade options but you need to do so a long term investment for him he knew he only had a matter of months and he knew that he needed to be able to pull at least the great majority of the principal out of the jury heard a listener permit the jury heard all of this yes the jury heard certainly possible that one could have put it have pursued a more conservative in by strategy and still exercised his discretion in trading in options for example he could have taken fifty thousand dollars or one hundred thousand dollars out of the five hundred something thousand and put that in options to try to get some sort of her turned on this on this account that he knew he was only going to have for say six months or so and that that don't sound  order to hedge the risk that the options would the mutual fund would go down and there's nothing about options that increases risk they can be used to have just well is to speculate both sides in this case seem to be assuming that all options are used only to speculate and that's just not how they work right and i think that that assumption comes from the language in the home in the absence of chronicling the talks about the risk of nature of options that determines that they're used to speculative investments right well i agree with that but i think in addition i think what we're responding to here is the language in the options account agreement that talks about it's not just the parties are assuming that options are risky but there are there disclosures saying hey there's risk inherent noxon's and what i'm saying is that yes the client was aware that patel signed off and authorized a certain level of options trading and he had some disclosure that options trading is risky what i'm suggesting is that you can do you can create a diversified portfolio where you're taking it risks with a small way to trade a half a million dollar fund and allocate some of that options trading even to risky type of speculations options trading without risking the entire fund which would have both allowed  i don't think that that mr patel understood exactly which kind of options or what out what options were options were there for options i'm not sure that it's a big difference if you don't do both ends of the  thousand dollars that he wants to invest in another one be one don't want to do that for several months so he sounds like a pretty good investor when it comes to restrooms or whatever certainly he and he put it and yes person business person but he also invested in his testimony was a trial he this is a guy that made the money by putting in his time he works the stores open to close so a lot of the way that he was able to save that kind of money was because he didn't hire employees would you say that stores are open to close he would he would work them from the opening time in the morning and he stole her until so close to night and i mean he's an even extremely hard worker so yes he's a savvy business person but he wasn't sitting behind a desk she understood that there might be money to be made here in the short term but he wasn't looking to put all of it at risk murky if were to do that which is why he had these conversations and this is all testimony that the jury heard and the jury made a decision on it  sclerotic stone this one well yes i mean no we've we got back a portion of our of our funds and we're still out a significant portion as well i think the issue is that this was a discretionary account yes my client has business experience but his business experience is you know running a cash register ordering inventory it's a very concrete you know ground level business for that this gentleman has done and he's made a lot of money at it she encountered this investment advisor that he had decades of experience and said i know what i'm doing i'll handle it i understand what you need i will i understand  don't make it happen i know when you need the money back i know what you need here don't worry about it and tell him back even after you've given the money and again expressed some concerns and like i said i've basically  worry about it he was intrusted to exercise his discretion in a way that comported with what mr patel's needs work and that's a testimony that the jury heard the jury determine that he didn't do it and that's why the jury found in our your honors the only thing that i can add here is that the the deep the problem at the heart of this case is that the testimony that was presented to the jury contradicted the nature and the terms of the contract signed by patel this was not just one reference to ri k this was not just one reference to options as was repeated references to risk and options and in the light of patel's own failure to write any instructions when given the opportunity to in the contract to write any instructions restricting securities tra it just flies in the face of the written contract to present contradictory testimony in this matter and it really strikes at the heart of investment contracts generally and as a as a precedent it's it's very problematic because it means investment advisors cannot rely on the contracts that they enter into at the outset that an investor who loses money can remember a conversation later in attack that at the heart of the contract in the authorizations that are actually why broker dealers always record conversations with investors i take it that this conversation was not recorded well my client's testimony was that the conversation testified to never happened that there was an entirely different conversation which is reflected in the contract and not not what patel doesn't mind you couldn't record  conversation that never happens is that would be difficult but his view is that it was based on merger testimony i understand that's not the the stuff out of which appeals are made this is we're talking about law and i'm trying to address