Bouse et al v Wedbush Morgan Securities, Inc. - $3.8 million CMO Award
In May 2006, an NASD arbitration panel in Los Angeles, CA ordered Wedbush to pay 22 clients of its Newport Beach branch and their attorneys $3.8 million. Wedbush sold Claimants lower tranche manufactured housing CMOs as good substitutes for bank CDs, suitable for "widows and orphans." Dr. McCann testified 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.