An RIA and former CFP who served wealthy families has already lost
"The arbitrator's jaw just kind of dropped," when attorneys for
"Obviously, the whole fiduciary duty of the RIA is such a hot issue," adds Gitomer, of firm McCausland, Keen & Buckman. "It seemed to be that they were somewhat uninformed if they were making that argument or trying to extend the law beyond a way in which the arbitrator would consider palatable."
Neither Weiss nor his lawyer immediately returned phone calls seeking comment.
POLISH TOBACCO INVESTMENT
In the smaller case, filed in district court in
A fund controlled by the tobacco company had funneled some money on to a gas turbine power-generating plant in
"It's as crazy as it sounds," Bruch says, "and it's totally news to the client who thought he was investing directly through
The arbitration award in the larger case, filed
"It is settled law that registered investment advisors … have a fiduciary duty to their clients pursuant to the federal Investment Advisors Act of 1940 … and that duty is not dependent on whether or not they have discretionary authority," he writes. "
Cottone awarded plaintiffs
Among other transgressions, Weiss failed to disclose to the Sutows that he was a longtime personal acquaintance of
And none of the investments were consistent with the "moderate to conservative" risk profile that the plaintiffs,
'TOTALLY UNSECURED … GROSSLY INADEQUATE'
A banking expert, testifying on behalf of the Sutows, convinced Cottone that Weiss and his firm did essentially no due diligence on the money-losing investments, the complaint says.
"The legal instruments that were recommended for signature by [Weiss and his firm] to [the Sutows] to record these investments were characterized by [the Sutows] in the hearing brief as 'amateurish,' but they are worse than that," Cottone writes. "They seem to have been done on the back of an envelope, are totally unsecured notes with questionable credit, and provide grossly inadequate returns for the risk taken."
The website for
The firm's website says it "seeks to fulfill its fiduciary obligations by providing objective, conflict-free investment management advice."
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