A couple from Long Island who lost over $5 million in a scheme perpetrated by Mark C. Hotton, at stock broker who worked for Oppenheimer and Company. Mr. Hotton became infamous after he defrauded producers of the Broadway play “Rebecca” by collecting commissions and fees for organizing financing with an investor that never existed. He pleaded guilty to money laundering and two counts of fraud last summer and will be sentenced on May 9th. While working at his Oppenheimer branch, Hotton was accused of stealing millions of dollars from his clients.
Louis and Donna Pitch, a couple from Long Island filed a claim with the Financial Industry Regulatory Authority (FINRA) against Mr. Hotton and Oppenheimer in December 2009. Before the hearing began Mr. Hotton filed bankruptcy leaving Oppenheimer as the sole respondent. The arbitration panel ruled that the couple could only recover half of their losses after Oppenheimer argued over the course of 69 hearings that it properly supervised Hotton while he was employed with them and that they had not negligently hired him. Oppenheimer claimed any misdeeds by Hotton came after he left.
That was not true.
Five months after the conclusion of that case against Oppenheimer and Mr. Hotton, an attorney discovered letters detailing Mr. Hotton’s improper dealings while at Oppenheimer on a disk produced in a separate case. That evidence would have completely destroyed the case put forth by Oppenheimer. Unfortunately, by the time the letter was discovered the period for asking a court to vacate their FINRA award had expired.
Securities lawyers say that disputes over discovery are a regular occurrence. The failure to produce documents has long been an issue in FINRA disputes. Often brokerage firms will put up staunch resistance at producing even the most benign of documents.
If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.