Farah v Wedbush Morgan Securities, Inc. - $4.3 million CMO-related Labor Award
In September 2013, an FINRA arbitration panel in Los Angeles, CA ordered Wedbush to pay a former broker and his attorneys $4.3 million including $1,334,387 for lost income, $1,439,555.50 in punitive damages, $1,472.005.79 in attorneys' fees, $18,500 in expert witness fees and $21,674.25 in other costs. Wedbush provided lower tranche manufactured housing CMOs to the broker for sale to his clients as good substitutes for bank CDs, suitable for "widows and orphans" back in 2001 and 2002. After losses in these private label CMOs, dozens of clients filed arbitrations against Wedbush. Dr. McCann testified in the underlying customer arbitrations and again in this recent labor case, that the CMO's were highly speculative and not suitable for risk adverse bond investors. He also testified that this failure to make complete and accurate disclosures was a breach of the fiduciary duty owed to brokerage firm customers.