Readers know quite well my views regarding the irresponsible use and administration of antidepressants in our society.
While out of state in court, I read yet another troubling piece this AM in the NYTimes regarding the alarming increase in the suicide rate in the military. One thread in the piece was disturbing; albeit not surprising. One example: "After his death, she began to uncover clues. Medical records showed that despite his denials about PTSD, the Marine Corps had treated him for the disorder, including by prescribing him antidepressants".
This use of antidepressants was a thread that runs through almost every individuals' story in the article.
Read any article regarding a violent event and the perpetrator or suicide. How often does antidepressant use seem to play a role in the event?
As I have frequently stated, these drugs can be efficacious IF ADMINISTERED PROPERLY, with appropriate followup, combined with behavioral therapy. This is the position of the psychiatric experts with whom I have worked in litigation. However, if we allow these potentially harmful drugs to be prescribed like candy, we will continue to witness the horrible end results.
An area of our practice consists of not only representing defrauded investors, but also representing legitimate brokers and investment advisors in their practices.
Yesterday, I won a defense verdict for one of our advisors in a case in Norfolk Superior Court.
Our client was sued by a wealthy client who alleged that he had given sale instructions to our client to go into a "50% heavy cash position" before the global financial crisis of October 2008. Although our client acknowledged that discussions had occurred about the state of the market, no sale instructions had been given. In addition, we argued that even had instructions been given, it would not have been "prudent" to initiate such a position and incur enormous capital gains consequences in the taxable accounts at issue.
Registered Investment Advisors are governed by the "Prudent Man" rule, which requires that they act in the best interests of their clients. In addition, our client had complete "discretionary" authority to manage the client accounts, which had over 4.4 million in assets.
The trial involved many interesting issues involving the global crisis of 2008, the duties of both registered investment advisors and brokers and issues of "market timing". Ultimately, the plaintiffs' terminated our client at the bottom of the market in 2009. However, we were able to prove that had the client kept his accounts with our advisor client, those same accounts would have recovered all of their value, plus made additional significant gains.
We obtained defense verdicts on behalf of our client on all counts. The Dedham jury only deliberated for an hour and 20 minutes before finding in our favor.
By Mary Ann Bragg
March 02, 2013
HYANNIS — An 80-year-old West Yarmouth woman says that in 1998 her former financial adviser sold her a $2 million life insurance policy that was inappropriate for her age, income and net worth. As a result, Jane McInnes is trying in Barnstable Superior Court to recoup more than $1 million from the adviser, Karl McGhee Jr., and the firm he was associated with at the time, LPL Financial LLC.
On April 4, the state Supreme Judicial Court will consider one aspect of this case: whether McInnes has to settle her claims through a securities industry arbitration process or in a courtroom.
The case in Barnstable Superior Court is on hold while the higher court considers it.
"I was thinking it would be nice for my boys," McInnes said Thursday of the insurance policy as she sat in the Hyannis office of her attorney, Bruce Bierhans. McInnes, a widow, has two adult children. She lives at Mayflower Place, a senior housing complex, and said she lives on proceeds from the sale of her house in Marstons Mills.
At the time McInnes purchased the life insurance policy, McGhee — as her adviser — had estimated her net worth was under $500,000, court records state. She and her attorney maintain that the policy sold by McGhee was too large.
McGhee and LPL Financial want to settle McInnes' claims through arbitration, using the services of the Financial Industry Regulatory Authority, an independent regulator of securities firms. They say McInnes signed a document in the 1990s and again in 2003 agreeing to settle disputes through arbitration and that she should abide by that.
McInnes, though, is pursuing her claims in court using state laws, the Consumer Protection Law and the Uniform Securities Act to ensure a fair hearing of her concerns, Bierhans said.
"We would much prefer to litigate in the state court with a jury of her peers rather than before an industry arbitration panel," Bierhans said Wednesday.
McInnes first filed her complaint on Sept. 28, 2011, in Barnstable Superior Court, alleging that McGhee failed to disclose the overall details of how the policy operated and its costs and risks. She also alleges he intentionally misrepresented facts about her investment, breached his fiduciary duty by failing to inform her of many aspects of the policy and intentionally inflicted emotional distress. McInnes also alleges that LPL Financial is liable for McGhee's actions while he was employed by the company.
McGhee had advised McInnes on financial matters since 1990. Starting in 1996, he was registered as a securities broker through LPL Financial at a South Carolina branch, according to FINRA records. He is no longer employed by the company, attorney Thomas Carey Jr., who is representing McGhee and LPL Financial, said Wednesday.
After McInnes filed her complaint in 2011, LPL Financial and McGhee filed motions asking a judge to place the court proceedings on hold and force her to participate in arbitration. The motions, in 2011 and 2012, were denied. The denial in 2011 specifically cites a 1982 ruling by the state Supreme Judicial Court that says consumers don't have to submit to arbitration as a precondition to obtaining relief under the state Consumer Protection Act.
The 1982 ruling is what McGhee and LPL Financial now say is out-of-date, considering more recent rulings in state and federal courts, Carey said. In December, the pair asked the Supreme Judicial Court to review whether the 1982 ruling remains viable, and the court agreed to the request. The pros and cons of that legal question will be argued at the April hearing.
"Our position has been that the early SJC case no longer has any vitality, given later developments," Carey said. "The principal reason we asked the SJC is that they're the only ones who can say, 'We're going to overrule our earlier case.'"
In 2003, McGhee settled with a customer who complained that she purchased a $1 million life insurance policy that was inappropriate for her needs, according to FINRA records. The settlement was for $30,000, with no admission of wrongdoing or liability by the broker.
- See more at: http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20130302/NEWS/303020325/-1/NEWS01#sthash.YvJnuW9y.dpuf
We were saddened this week by the unexpected passing of Attorney John Norton. John has been with our firm since January of 2012, although I have known him for over 11 years.
John was both a colleague and a friend. His easy going nature and competence was valued by our staff, clients, lawyers, and judges before whom he appeared. He had many friends and a wonderful family and will be sorely missed by all.
A "Celebration" of John's life will be held on Saturday, March 2, at the Dennis Inn at 4PM. We look forward to celebrating with John's friends and family.
A number of years ago, I was in an internet stock club. Most of the members in the club were gaga over a particular stock. I researched the stock and couldn't figure out how the company made money, so I passed on the stock. The company was Enron. Enough said for the moment.
On Monday, Nathaniel Popper of the NYTimes wrote a piece about the problems associated with investors chasing better returns in a low interest environment. As you might imagine, the scammers are circling again. Popper points out that tens of thousands of individuals put money into "speculative" bets promoted by aggressive financial advisers. The investments include private loans to young companies and shares in bundles of commercial real estate properties.
As my readers know, we presently have a case against LPL Financial which is going before the Massachusetts Supreme Judicial Court in which the court will rule on the enforceability of an Arbitration clause in a brokerage contract where the injured plaintiff alleges fraud and violations of MGL ch. 93A in the sale of an unsuitable product to an elderly client. The client lost her life savings and LPL asserts that she must proceed to financial industry arbitration (rather than a jury trial) and that the Federal Arbitration Act trumps state consumer protection law. Interestingly, the NYTimes article notes that Massachusetts Secretary Galvin last week ordered LPL to pay $2.5million for improperly selling non traded REITS to hundreds of Massachusetts residents between 2006-2009. Congrats to Secretary Galvin!
Popper notes that "Brokers promoting bad investments to unsophisticated investors is nothing new. But while the easy prey used to be people looking to get rich quick, the pool has widened to include savers looking to earn the kind of income once reliably available from traditional investments".
Although the victims in these cases are, more often than not, elders, the current economic setting makes every investor a target. Everyone is trying to stretch their retirement dollar or maximize returns. Back to Enron. If you don't know what you're investing in, or can't explain it to your child or a neighbor, why place your savings at risk? If it sounds to good too be true, it probably is. Think of the recent case in which we recovered over $750k for a Harwich elder that was placed in unsecured notes promising to pay 12%. By the way, wasn't that the interest rate Bernie Madoff told his investors they were earning?
Readers of this blog are well aware of my involvement in cases involving the misuse/abuse of antidepressants, particularly the SSRI's.
For those that have been diagnosed with ADHD, or have children that have been prescribed Adderall, there is a must read in todays's NYTimes. It tells the story of Richard Fee, a talented 24 year old that had been diagnosed with ADHD, became addicted to Adderrall and committed suicide. The extensive article deals with the actual diagnosis, the use or misuse of the medication, and the signs and signals leading up to the suicide.
The article notes that in 2011, 14 million monthly prescriptions for Adderall were written for Americans ages 20-39.
For a very small flavor of the article: "Dr. Charles Parker characterized the case as a virtual textbook for ways that ADHD practices can fail patients, particularly young adults. "We have a significant travesty being done in this country with how the diagnosis is being made and the meds that are being administered...I think it is an abnegation of trust. The public needs to say this is totally unacceptable and walk out."
Richard's father: People have to know that kids are out there getting these drugs and getting addicted to them. And doctors are helping them do it".
Obviously, the entire article needs to be read. However, along the same lines as the articles I have authored on antidepressants, education and awareness on the part of the patient, or the parent, are crucial. There is no alternative to your own due diligence.
OK; you've been in a car accident. You were rear ended and have back and neck pain; no broken bones. Maybe you have a concussion (also known as a mild traumatic brain injury to us lawyers). You've gone to your primary care physician and are now following up with a physical therapist or chiropractor.
You've been smart and immediately contact a competent personal injury attorney because you know that the insurance carrier for the at fault driver will immediately be doing anything and everything they can to pay you as little as possible on your claim. What do you do next? You post to all your Facebook friends about your upcoming ski weekend or imminent trip to the Caribbean. You also just gave the insurance adjuster, who is doing a social media search on you a reason to tell your lawyer to jump in the lake. Your recreational activity may be perfectly legitimate and even consistent with your recovery, but this will be used against you; particularly in front of a jury, if your claim gets that far.
We all know that privacy in this day and age is literally non existent. But; if you are a litigant or potential litigant, do not make the job of your adversary any easier. If you just had an accident, and are well enough to engage in certain physical activities, that will certainly have an impact upon the ultimate value of your case. However, if you claim to have an injury, and then advertise to the world that you are off frolicking somewhere, you may have compromised your credibility and have done damage to your claim that your lawyer can't fix.
So...as I tell all my clients, once you have been injured and posess a legitimate personal injury claim, NO Facebook; unless you're just posting your mothers recipe for meatloaf!
Readers know that investor fraud and scams, particularly involving the elderly, has been an important area of our practice for some time. I'm thrilled that the Massachusetts Supreme Judicial Court (SJC) has agreed to hear one of our cases to decide an extremely important issue.
We represent a cape widow, 78 years of age, that was doing business with a broker/dealer and investment advisor employed by a company known as LPL Financial. The advisor had our client purchase a Variable Universal Life Insurance Policy on which she paid premiums over an 8 year period exceeding $330,000.00. The premium payments, in effect, depleted her life savings. In our Barnstable Superior Court lawsuit, we have argued, in summary, that not only was the policy unsuitable for this customer, but that the investment advisor engaged in fraud and breached his fiduciary duty to his customer.
On two occassions, LPL moved to dismiss the case, arguing that the widow was required to submit to binding arbitration pursuant to the investment contract she signed, and that state law was premepted by federal law, specifically the Federal Arbitration Act. Two Barnstable Superior Court judges Denied LPL's motions, ruling, in effect, that the the allegations of fraud in the underlying contract permitted the widow to pusue her state law consumer protection claims. LPL then appealed to the Massachusetts Appeals Court and also filed a Motion asking the SJC to take the case. That Motion was Allowed and the SJC will now decide the case.
This decision will have far reaching implications for consumers and victims of fraud in Massachusetts. My view is that LPL is actually arguing that their investment contract gives them the right to commit fraud and then deprive a consumer of their rights under state law. In other words, you can place an unsophisticated consumer in an unsuitable financial vehicle and when they attempt to assert their rights, force them to arbitrate their claims before an industry dominated arbitration forum, rather than pursue their right to a trial by jury. This would be an absurd and horrendous result.
This will ultimately be an extremely important decision and I will keep readers informed.
I would like to wish all CCToday readers a wonderful, healthy holiday and New Year.
As we continue to struggle with the horrific event in Newtown, and wait to see if our President and Congress can exercise an iota of responsible leadership, we here on the Cape are fortunate for so many reasons.
I thank all those individuals that I have had the opportunity to work with in various non profits in health care, the arts, community and human services. The dedication I see every day from truly selfless people is heartwarming.
Be well and Best Regards, Bruce.
This Saturday and for the following three Saturdays
See great entertainment while helping your neighbors!
Starting this Saturday at Wellfleet Harbor Actors Theater (WHAT), and for the following three Saturdays, we present Yule for Fuel.
A Benefit for Fuel Assistance to Help Residents of the Lower Cape.
Four Fabulous Nights of Music, Readings, Comedy and Special Surprises; Including the First Night of Chandler Travis’ Annual Christmas Cavalcade on December 15 with your host, Stephen Russell and, a star filled roster of Cape talent!
With the cooperation of local oil suppliers, this program, done in conjunction with Lower Cape Outreach, provides a full tank of fuel to eligible families.
Let's remember all our local food pantries, and social service networks that provide basic services, not only seasonally, but all year.
And... I hope to see you at Yule For Fuel!
See great entertainment while helping your neighbors!