I was given a mortgage I did not qualify nor understand. I was made to move my securities from   XXXX   XXXX   to Merrill lynch/ Boa. My urla was fabricated to make me qualify. I suspect I was a victim of robo signing.
I was too ill from all the stresses to understand, I was unsophisticated and not an investor and did not ever get a mortgage myself ( my x did all our financial dealings ). I went to professionals and expected them to be honest and take care of their fiduciary responsible it me and my children. THEY DID NOT!
They gave me a jumbo interest only 6.75 % mortgage, AND I paid the insurance and taxes!!
No government program would help me for the parameters they had me placed into!
I could get no one to help!
My children 's account are lost. My IRA. My only securities!
I WAS TOLD TO SIGN A PAPER, THE FOLLOWING YEAR AFTER THE MORTGAGE WAS CREATED, A PAPER THAT SAID I UNDERSTOOD MORTGAGING MY HOME AND INVESTING THE MONEY IN THE MARKET WA NOT ADVISED!! I UNDERSTOOD NONE OF THIS AND WAS NOT TOLD THIS, THIS DOCUMENT HAD TO BE EXPLAINED TO ME YEARS LATER. I JUST SIGNED WHAT THEY TOLD ME TO SIGN BACK THEN, I WAS TOO ILL TO KNOW BETTER.
I DID WHAT THEY TOLD ME I NEEDED TO DO.
I HAD TOTALLY TRUSTED THE MORTGAGE PERSONS, AND THE INVESTORS!
I UNDERSTOOD NOTHING AT THIS TIME, AND RELIED ON THESE PROFESSIONALS!
EVERYTHING DONE TO ME HAD THE OPPOSITE AND WORST EFFECTS POSSIBLE.
I made it known I never worked, was 3 times abused and hospitalized, in a violent divorce, and under counseling AND GOT A  XXXX  WAS ON MEDICATION AND HAD TO WEAR BRACES ON MY TEETH FOR THE LAST BATTERY. I had   XXXX    small children at the time that I had to take care of by myself. I was told the female mortgage person that was helping me, and also divorcing that she totally understood my situation. I never worked and had no income. My x was mostly not paying, and hardly did.
I had a judgment, I could never collect. HE STILL IS NOT PAYING!
The boa urla person I spoke to on the phone in the mortgage person 's office, did not sign the urla and was named   XXXX   XXXX   I spoke to him only by phone once ; the bank double my securities value, my home appraisal value and said I earned $   XXXX   a month, and that i was worth {$5.00} million. All not true. They were going to create an income from the mortgage money invested by them in Merrill lynch/ BOA and my original portfolio once liquidated to have enough income to pay all my bills and mortgage. This did not work and the opposite actually occurred. And, the capital gains from the sale of my portfolio almost killed me, and I as told it was not going to be much! it took me years to pay off!
I was never allowed to refi or modify no matter how many times I tried, they always lost my paperwork OR made me start over! And, never helped me at all.
I got extremely ill for all the  XXXX , this financial blunder and ruination of my life.
I eventually ran out of money for the situation I was placed into by the mortgage and liquidation of my original portfolio and the purchase of bad securities. And, my children 's accounts were used as my assets, and theirs were also lost.
I even got a call from one of the BOA refi persons at boa that she was quitting because boa gave no one the ability to refi or modify.
Please, look at all my details and documents. any professional who sees my case tells me that they had never seen this much abuse before!
I need help from this bank and the incredible abuse I have had to endure. They did performed many illegalities to have me qualify a mortgage I did not, and had me invest the proceed into the market illegally and had me liquidate my original portfolio for no reason except to be able to reinvest and make more money off of me. They front end loaded the commissions and bought me unsuitable investments. I was bankrupted with the  XXXX ,   XXXX   XXXX   and  XXXX  they purchased! They made it necessary for me to have to sell off just to be able to live and pay my bills for me and my  XXXX  children.
I have truly lived a nightmare for all these people did to me and my children!!
I have zero social security ad zero retirement, I made all that known, my children money is gone now too for all of this. I went to the back and securities professionals for help and has financially annulated!
It ruined our lives!
I need help and these evil, greedy people need to be punished.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --   XXXX   XXXX   XXXX   Claimant, v.
BANC OF AMERICA INVESTMENT SERVICES, INC., ( CRD #   XXXX   ) ;   XXXX   XXXX   XXXX   ( CRD #   XXXX   ) ;   XXXX   XXXX   XXXX   ( CRD #  XXXX  ) ;   XXXX   XXXX   XXXX   ( CRD #   XXXX   ) ;   XXXX   XXXX   XXXX   ( CRD #   XXXX   XXXX   ; and   XXXX   XXXX   XXXX   ( CRD #  XXXX  ) Respondents.
STATEMENT OF CLAIM   XXXX   XXXX   XXXX  , Claimant, makes this claim for compensation for losses arising from the Respondents recommendations of unsuitable securities transactions. Respondents breached their respective fiduciary duties, committed acts of securities fraud, negligence and misrepresentation by recommending and executing an investment strategy in which the Respondents arranged for the claimant, an unemployed mother of   XXXX   minor children, to take out a {$650000.00} home equity loan and invest the proceeds, on margin, in highly speculative and unsuitable equities, causing her to suffer financial losses.
Claimant hereby demands arbitration of her claims against Banc of America Investment Services , Inc., ( CRD #   XXXX   ) ;   XXXX   XXXX   XXXX   ( CRD #  XXXX  ) ;   XXXX   XXXX   XXXX   ( CRD #  XXXX  ) ;   XXXX   XXXX   XXXX   ( CRD #  XXXX  ) ;   XXXX   XXXX   XXXX   ( CRD #   XXXX   ) ; and   XXXX   XXXX   XXXX   XXXX  . ( CRD #   XXXX   ), ( Respondents ) based upon transactions in account number   XXXX   maintained with Respondent Banc of America Investment Services , Inc. Claimant requests that the arbitration hearing be held in  XXXX , Fl.
I. PARTIES Claimant   XXXX   XXXX   XXXX    is  a   XXXX   year old unemployed, divorced mother of   XXXX   minor children living in   XXXX   XXXX  , Florida. Respondent Banc of America Investment Services , Inc. is a broker dealer member of FINRA based in  XXXX , Massachusetts. Respondents   XXXX   XXXX   XXXX   and   XXXX   XXXX   XXXX   are registered representatives of Respondent Banc of America Investment Services , Inc, in  XXXX , Florida. Respondent   XXXX   XXXX   XXXX  , at the times relevant to this Statement of Claim, was a registered representative of Respondent Banc of America Investment Services , Inc., and was also a Vice President and Client Manager with the Premier Banking and Investments program of the Bank of America, N.A. Respondent   XXXX   XXXX   XXXX   XXXX  . is a broker dealer member of FINRA based in  XXXX , TX. Respondent   XXXX   XXXX   XXXX   is a registered representative of Respondent   XXXX   XXXX   XXXX   XXXX  ., who, at all relevant times lived and had his office in   XXXX   XXXX  , Fl.
II. FACTUAL BACKGROUND By the summer of  XX/XX/XXXX , the Claimants protracted divorce proceedings left her with the sole ownership of an unencumbered residence on   XXXX   XXXX  , Florida, valued at about 1.2 million dollars, as well as sole ownership of a   XXXX   XXXX    investment account. The investment account contained about {$870000.00} in securities, with about {$390000.00} in margin debt, for a net value of about {$480000.00}. Each of these assets had been previously jointly owned by Claimant and her ex-husband. The Claimants ex-husband had been ordered to pay her alimony and child support and to pay off the margin debt on the investment account ; however, he was not making those payments.
The Claimants immediate financial problems were  XXXX fold. She had to support herself and   XXXX   minor children, but had no income other than the earning from her investment account. She was forced to make withdrawals from her available margin to meet her living expenses, a practice she knew had to stop. The Claimant had been a homemaker during most of her twenty-two year marriage and had never developed marketable job skills.
Secondly, the Claimant had no idea how to manage the investment account ; it had been assembled and monitored during the course of her marriage by her financially sophisticated in-laws. She had no investment experience or knowledge and was desperate, even frantic, to find a solution to her financial problems.
The constant pressure of her financial and legal problems made her physically ill and emotionally exhausted. It was at this point that Respondent Grant presented himself as the solution to the Claimants financial woes. Describing himself to her as a financial Wizard, he asserted that his credentials and experience in the securities industry, particularly his position as Managing Director, Corporate Syndicate, Structured Products with Respondent   XXXX   XXXX   XXXX   XXXX  , gave him the ability to assist the Claimant in dealing with her financial difficulties. He advised the Claimant that he managed the investments of a small number of people, including some relatives, with great success. Respondent Grant described the Claimants financial position to her as being too long real estate, a situation that should be corrected by mortgaging the residence and investing the proceeds in the stock market. Respondent Grant assured the Claimant that the mortgage proceeds could be invested so as to provide a return sufficient to pay all of Claimants monthly expenses, including a mortgage payment.
Claimant met with Respondent Buchanan and opened a margin brokerage account and money manager account with Respondent Banc of America Investment Services in  XX/XX/XXXX , at their   XXXX   XXXX   office. Respondents  XXXX  and  XXXX  acted as Financial Advisor and investment consultants on the account. Claimants   XXXX   XXXX   account was then transferred to Respondent Banc of America Investment Services. At that time that account had assets of about {$810000.00}, margin debt of {$270000.00} for a net value of {$520000.00}.
Each of the Respondents recommended that the Claimant mortgage her residence and speculate with the proceeds in a margin account. In  XX/XX/XXXX , Respondent Grant arranged with Respondent Harber for the Claimant to receive a {$650000.00} loan from the Bank of America, secured by the Claimants residence. The loan required interest-only payments of {$3700.00} for ten years before switching to a principle and interest repayment schedule. The loan proceeds were immediately deposited into the Banc of America Investment Services , Inc., brokerage account. The margin debt was paid, leaving an account value of about {>= $1,000,000} ( of course, even though the margin debt was paid, the home equity loan of {$650000.00} was still owed and demanding interest payments of {$3700.00} every month. ) Each of the respondents, either directly or vicariously, asserted to the claimant that they could engineer a rate of return in her Banc of America Investment Services , Inc., investment account sufficient repay the mortgage and to support the claimant and her children. To earn this rate of return the Respondents then recommended that the existing equities in the portfolio be liquidated and other, more speculative equities be purchased. They assured Claimant that her tax consequences from such a liquidation would be minimal. The actual tax consequences were far from minimal ; the sales caused Claimant to incur a tax liability to the IRS of almost {$45000.00}, a bill she was unable to pay and on which she continues to make monthly payments.
The transition to a more aggressive speculative portfolio continued, and after a period of brief success, asset value of the portfolio began a precipitous decline. Eventually the portfolio included such highly speculative investments as preferred shares of   XXXX   XXXX  e, ( {$50000.00} invested ) ;   XXXX   XXXX   ( {$50000.00} invested ), and   XXXX   XXXX   ( {$100000.00} invested ), all of which became practically worthless. Respondents misrepresented the risk associated with the   XXXX   XXXX   and   XXXX   XXXX   investments by assuring the Claimant that the Federal government would stand behind those issues. A more complete description and analysis of these and other speculative investments will be presented at the arbitration hearing. At no time did any of the Respondents explain to the Claimant the risks she was undertaking, that she was risking not only her investment account, but her home as well. Respondents misrepresented the risk associated with the Claimants investments by assuring her of the viability of their investment scheme and by continuing to recommend speculative investments to her.
The Respondents assurances of an investment return sufficient to support the Claimant and her children never materialized. Claimant was forced to repeatedly draw upon her margin account to meet her expenses, a predictable and disastrous consequence of the Respondents plan of action. The Claimant sank deeper into debt as her portfolio value decreased and the value of her now mortgaged house plummeted.
Claimant recognized from the beginning that she lacked the background, experience and investment knowledge to make intelligent informed decisions about her investments. She knew she needed help with her financial affairs. She relied completely upon Respondents Grant, Gear,   XXXX   XXXX   XXXX    and their professed expertise. On several occasions when the Claimant asked if she should obtain other financial advice, she was assured that that was not necessary, that the Respondents would take proper care of her.
III. CLAIM The investment strategy crafted by the collective actions of each of the Respondents was fatally flawed on two levels.
All of the investments made by the Respondents are tainted with the fundamental and underlying unsuitability of using a home equity loan to fund stock market speculation. The recommendation to mortgage the house and speculate with the proceeds and the misrepresentation of the risks associated with that strategy are a breach of fiduciary duty, negligent, breach of contract, violations of state and federal law, and violations of FINRA/NASD Rules.
  XXXX   XXXX  , then NASD Vice  XXXX , and President, Regulatory Policy and Oversight, in a speech to Security Industry Association Compliance and Legal Conference on  XX/XX/XXXX , page 7 of 8, might have had the Claimants situation in mind when she stated : " So, I will go out on a limb here and say that 99 % of the time, a recommendation that an investor mortgage his or her home in order to speculate in the securities market- IS UNSUITABLE- and subject to potential enforcement action.
We brought three enforcement cases last week against individual brokers for making unsuitable recommendations that included convincing clients to mortgage their houses. '' [ Emphasis in original. ] Respondents ignored the cautions of  XX/XX/XXXX  : As noted above, investing liquefied home equity presents unique risks and also may present conflicts.  XX/XX/XXXX  believes members should ensure that their supervisory systems address these risks and conflicts.
Firms that recommend or facilitate investments of liquefied home equity should consider the extent to which customers are adequately informed of the risks and conflicts of such a strategy.  XX/XX/XXXX  has previously developed risk disclosure statements for certain other trading strategies, such as margin and day trading accounts.
Although  XX/XX/XXXX  is not proposing a specific, standardized risk disclosure document,  XX/XX/XXXX  believes members recommending investments of liquefied home equity should pay particular attention to providing investors with adequate risk disclosure. Among the risks and conflicts of investing liquefied home equity are : ( 1 ) the potential loss of ones home ; ( 2 ) the fact that unlike other potential lenders, the member has an interest in having the proceeds of the loan used for investments that may generate commissions, mark-ups of fees for the member ; ( 3 ) the member or its affiliate may earn fees in connection with originating the loan ; ( 4 ) the impact of liquefied home equity on the ability to refinance a home mortgage ; and ( 5 ) depending on the amount of home equity liquefied and any change in home value, the homeowner may have negative equity in his or her home.
Members should also pay particular attention to their sales materials and oral presentations concerning investments of liquefied home equity.  XX/XX/XXXX  reminds its members that the promotion of liquefying home equity must be fair and balanced, and must address the associated risks. For example is a member presents a scenario in which the investment returns from liquefied equity will be sufficient to pay the costs of accessing such capital, the member should highlight the risk that such returns may not be achieved and that the customer may have to access additional sources of funding to pay the mortgage or equity line of credit or risk foreclosure.
Respondents repeatedly assured the claimed that if she trusted their expertise they would manage her portfolio so that it would earn enough to pay the mortgage costs and all of her living expenses. The risks described in   XXXX   XXXX   XXXX    were not a real danger in the eyes of the respondents, because their expertise would lead the claimant through those risks to financial success, if only she would trust them. Of course, her trust was not rewarded with financial success, rather the portfolio lost hundreds of thousands of dollars, as will be shown at the hearing on this matter. These losses were made all the more devastating to the claimant as the value of her house plummeted to where its sale would probably not yield enough to pay off the mortgage.
The unsuitability of using liquefied home equity for speculation on margin was compounded when the respondents dumped the existing portfolio of dividend producing income stocks in favor of much more speculative equities, including but not limited to, the   XXXX   XXXX  ,   XXXX   XXXX   and   XXXX   XXXX   issues described above. The respondents constructed a portfolio of nearly 100 % equities for the claimant, putting her entire net worth at risk in the market.
Each respondent had non delegable fiduciary responsibilities to Claimant and each were bound by Florida and Federal law, and by   XXXX   Rules to not make unsuitable investment recommendations and to not misrepresent the risks associated with the recommended investments. The Respondents each breached this fiduciary duty and recommended unsuitable investments to an unemployed mother of two minor children so that almost all of her net worth be speculatively invested on margin ; a recommendation that caused the claimant to suffer losses.
The Respondents each had a fiduciary duty to exercise the utmost good faith and loyalty in their dealings with Claimant.   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX  ,   XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1987 ) ; T  XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX     XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1983 ). Indeed, according to the SEC, securities brokers have a fiduciary obligation to their customers under both the common law rules of agency and the rules of the   XXXX   and  XXXX . See, In re   XXXX   XXXX   XXXX   XXXX   XXXX   , Exchange Act Release No  XXXX   XXXX   XXXX   1988-89 Transfer Binder ] Fed. Sec. L.Rep. ( CCH ) 84,303 ( XX/XX/XXXX  ) ( The concept of just and equitable principles of trade embodies basic fiduciary responsibilities .... ).
According to the Eleventh Circuit Court of Appeals, the fiduciary responsibilities of a broker include : 1. The duty to recommend a stock only after studying it sufficiently to become informed as to its nature, price and financial prognosis ; 2. The duty to carry out the customers orders promptly and in a manner best suited to serve the customers interests ; 3. The duty to inform the customer of the risks involved in purchasing or selling a particular security ; 4. The duty to refrain from self-dealing ; 5. The duty not to misrepresent any material fact to the transaction ; and 6. The duty to transact business only after obtaining prior authorization.
  XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX  .,   XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1987 ) ( quoting Lieb v. Merrill Lynch,   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX     XXXX   XXXX   XXXX   XXXX   XXXX   ( E.D. Mich. 1978 ) ).
Part of that fiduciary duty is the well-recognized obligation of a broker to have a reasonable basis for each recommendation he makes. According to the SEC, the making of recommendations for the purchase of a security implies that the dealer has a reasonable basis for such recommendation, which, in turn, implies that, as a prerequisite, he shall have made a reasonable investigation. SEC Securities Act Release No.  XXXX  (  XX/XX/XXXX ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( 2d Cir. 1969 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( 9th Cir. 1980 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( S.D.N.Y. 1993 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( E.D. Pa. 1993 ).
Respondents breached their fiduciary duty to the Claimant by failing to have a reasonable basis for recommending liquefying the claimants home equity, selling off her existing portfolio of blue chip securities, and using all of the proceeds to buy speculative equities. The respondents claim that they could cause the portfolio to earn enough to pay the mortgage and support the claimant and her family would have required an immediate and consistent after-tax return of more than 10 %. There was no reasonable basis for such a claim. The respondents not only claimed the ability to meet this goal, they also failed to advise the claimant that there was a high probability that they would not meet that goal, and that failure to meet the goal could cause the claimant to loss her portfolio as well as her home.
The rules of the self-regulatory organizations such as the   XXXX   and the   XXXX   set out general standards of industry conduct and are evidence of the standard of care by which brokers must abide in dealing with their clients. In re   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   [ 1988-89 Transfer Binder ] Fed. Sec. L. Rep. ( CCH )   XXXX    (  XX/XX/XXXX  ). See also   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX     XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( 5th Cir. Unit A, 1981 ) ( industry rules are excellent tools against which to assess in part the reasonableness or excessiveness of a brokers handling of an investors account ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( N.D. Tex. 1976 ) ( violations of industry rules and practices give rise to common law claim for negligence ). Thus, violations of industry rules can be evidence of breach of fiduciary duty, negligence, common law fraud, securities fraud, breach of contract, and failure to supervise.
Respondents, as members of the  XXXX , are subject to Conduct Rules, and as such, were obligated to provide services to Claimant in conformity with those Rules. However, by the conduct outlined above, Respondents failed to abide by industry rules, including the following : a ) NASD Conduct Rule 2110 ( members shall observe high standards of commercial honor and just and equitable principles of trade ) ; b ) NASD Conduct Rule 2310 ( suitability ) ; c ) NASD Conduct Rule 2120 ( prohibition of the use of any manipulative, deceptive or other fraudulent device or contrivance ) ; and d ) NASD Conduct Rule 3010 ( supervision ).
Respondents had a duty to know the securities they were recommending for Claimants account and to reasonably believe that those transactions were suitable for the Claimant. According to the SEC, the making of a recommendation for the purchase of a security implies that the dealer has a reasonable basis for such recommendation, which, in turn, requires that, as a prerequisite, he shall have made a reasonable investigation.   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( Feb. 2, 1962 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ) ; In re   XXXX   XXXX   XXXX   [ 1983-1984 Transfer Binder ] Fed . Sec. L. Rep. ( CCH ) 83,459 ( SEC 1983 ).
Where unsuitable recommendations are made, or unsuitable securities are purchased, this duty is breached. Likewise, making unfounded statements or failing to disclose negative material facts to a customer constitutes a violation of these industry rules. Measured against these rules as a standard of a broker dealers duty to its customer, the Respondent was at a minimum negligent in the performance of its duties to the Claimant and Claimant is entitled to damages for this negligence.
Respondents Banc of America Investment Services , Inc., and   XXXX   XXXX   XXXX   XXXX  ., each had a statutory and common law duty to exercise reasonable supervision over their respective registered representatives and the securities they recommended including those recommended to the Claimants. Reasonable supervision would have detected the fact that the Claimants account was 100 % invested and over-concentrated in speculative securities,
funded with liquefied home equity and thereby needlessly exposed to excessive and unacceptable risk. Any investigation would have revealed that the investments were sold to the claimant on the basis of misrepresentations and omissions of material facts about the risks of the investments. In addition to liability for its own failure to supervise and liability as a statutory control person of Claimants sales representative, Respondents Banc of America Investment Services , Inc., and   XXXX   XXXX   XXXX   XXXX  , are also vicariously liable for the acts and omissions of its employees and agents under the doctrine of respondeat superior. In the Matter of   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX  . ; SEC Release No.   XXXX   ; Admin. Proc. No.   XXXX   XXXX    XX/XX/XXXX ) ;    XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX    ( M.D. Fla. 2003 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX  . v.   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( S.D. Fla. 1990 ).
The recommendation of unsuitable investments or the giving of unsuitable investment advice constitutes fraud under Florida law.   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX  ,   XXXX   XXXX   XXXX   XXXX   ( Fla. 1st DCA 1990 ). Mere negligence in the giving of investment advice constitutes both statutory and common law fraud in Florida.   XXXX   XXXX   XXXX   XXXX   XXXX    XXXX   XXXX   XXXX   XXXX   XXXX   ( Fla. 3rd DCA 2001 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX    XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1985 ). Proof of loss causation is not required in civil securities proceeding under sections 517.211 and 517.301 Florida Statutes. E.F.   XXXX   XXXX   XXXX   XXXX   XXXX  , 537 So. 2d. 978 ( Fla. 1989 ).
Misrepresenting and omitting material facts about investments also constitute violations of Chapter 517. Under Florida law, it is not necessary for the Claimant to prove scienter ( intent ), causation or reliance. Merrill Lynch v  XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( Fla. 3rd DCA 1975 ) ;   XXXX   XXXX   XXXX   XXXX   XXXX  . ;   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( S.D. Fla. 1990 ). Claimant is therefore entitled to rescind the purchases of investments from the Respondent. Section 517.211 ( 1 ) Fla. Stat.
IV. DAMAGES The Florida Investor Protection Act, in Sections 517.211 ( 3 ) through ( 6 ), specifies the legal remedy for a violation of the investor protection provisions of Chapter 517. Where the securities have not been sold, the investor is entitled to a refund of the purchase price, plus interest at the legal rate provided in Section 55.03 Fla. Stat., less any interest received on the investment. Section 517.211 ( 3 ) ( a ) Fla. Stat.,   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1990 ). Moreover, Respondent is not entitled to offset losses from transactions which violate Chapter 517 with interest, dividends or profits from other transactions in the account.   XXXX   XXXX   XXXX   XXXX   XXXX    supra.
When a Chapte r 517 vi olation is found, Florida and federal courts agree that statutory damages under Chapter 517 Section 211 are automatic and mandatory, with no discretion left to judges, jurors or arbitrators to fashion a remedy. Florida Statutes Section 517.301,   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( 11th Cir. 1992 ),   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   XXXX   ( Fla. 1991 ). Likewise, a prevailing party under Chapter 517 is entitled to attorneys fees unless the awarding of fees would be unjust. Section 517.211 ( 6 ) Fla. Stat. ;   XXXX   XXXX   XXXX   XXXX   XXXX  , 7  XXXX   XXXX   XXXX   XXXX   XXXX   ( Fla. 5th DCA 1999 ) ;   XXXX   XXXX   XXXX   XXXX     XXXX   XXXX   XXXX   XXXX   XXXX   ( Fla. 2001 ).
Since the Claimant still holds some of the securities in her account, she is entitled to rescind the purchase transactions and recover the purchase price paid for them less any income received on them. The Claimant is also entitled to an award of interest at the statutory rate as well as the refunding of interest that she has paid the Respondent for the margin loan. The Claimant is also entitled to an award of punitive damages under the Florida law of common law fraud and breach of fiduciary duty. Finally, the Claimant is entitled to recover hers attorneys fees incurred in this arbitration.
Claimant therefore requests that the panel award her the following relief : 1. statutory rescission, including the rescission of the entire {$650000.00} home equity loan deposited in her account, and the rescission of the unsuitable transactions in the account involving assets in the account other than the liquefied home equity loan proceeds. In connection with Claimants request for rescission, the Claimant hereby tenders to the Respondent all relevant investments in her account ; 2. disgorgement of all commissions and fees paid to the Respondent ; 3. other compensatory damages in such amount as the arbitrators shall determine ; 4. all of Claimants costs, expenses and disbursements in pursuing this arbitration ; 5. full reimbursement of all filing, forum fees and hearing fees ; 6. Claimants reasonable attorneys fees, with such amount to be determined by a court of competent jurisdiction in a confirmation proceeding following an Award by the panel in this matter pursuant to the Florida Arbitration Code, Fla. Stat. Section 682.01 et. seq., and as mandated by the appellate courts of the State of Florida ; 7. a finding that the Respondent committed violations of Florida Stat. Chapter 517 ; 8. pre-judgment and post-judgment interest until any award is paid ; 9. return on Claimants account calculated as if handled with her stated investment objectives ; and 10. such other and further relief, including but not limited to punitive damages, as the arbitrators deem just and proper in the circumstances.