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Securities, Options and Futures Consultants

Selected Expert Witness Cases ...

The following cases illustrate some of the matters handled by the expert consultants of Market Consulting Corporation (MCC) working with both plaintiffs/claimants and defendants/respondents across the country in arbitration, mediation, state and federal court, government enforcement actions, and the U.S. Tax Court.
See also Clients.

Plaintiff/Claimant Cases:

1. A Boston case involving an elderly widow who lost approximately $90,000 through unsuitable stock trading at a local brokerage house. By formulating damages in an unconventional way, we assisted the attorney in a successful settlement at low cost that recovered a larger than anticipated sum, which approximated the out-of-pocket loss. We have also participated in a number of other investment suitability cases involving middle-aged to elderly clients including those suffering mental deficiencies. These cases have sometimes involved short selling and margin borrowing. Proper formulation of damages is often paramount in achieving good results in settlement or at hearing.
2. Unauthorized trading in Maine case involving a brain-damaged woman whose trustee relatives arranged for her personal injury settlement funds to be placed in a brokerage account where subsequent unsuitable trading lost almost all of the funds.
3. Unauthorized and unsuitable trading of stock portfolio of middle-aged, Mid-western couple. Included short selling and heavy margin borrowing by a broker who also served as branch officer manager at a one-person office of a well-known regional firm. Control person liability and documenting violation of compliance manuals were important aspects of this case.
4. Assisted wealthy client in surviving a Motion for Summary Judgment in a case involving one of the largest positions ever established on a futures exchange and in the Interbank Market for currencies. Case established the fiduciary duty in New York of a broker who did not have discretion over the account of the customer.
5. Fraudulent trading of house stocks and bonds in a customer account. Here MCC assisted in the successful settlement of a case involving a prominent Texas businessman who became caught up in a scheme to sell very low quality house stocks to unsuspecting customers. Respondent was a long-established brokerage firm with a penchant for questionable sales activity.
6. Work with the Federal Bureau of Investigation and the United States Attorney in Boston on a major financial industry fraud case involving churning in futures, securities and options. Resulted in a criminal conviction of an individual who looted an investment pool of millions of dollars through excessive trading.

Defendant/Respondent Cases:

1. Work with a major California brokerage firm to defend its broker against a charge of churning and inadequate risk disclosure in connection with a day trading program involving both long and short selling. Defense involved determining whether a trading strategy existed, whether its track record had been properly disclosed to sophisticated clients, and whether a key person in the firm had guaranteed to return the account to profitability.
2. Suitability matter in Nevada involving defense of broker against customer. Case involved duties of broker where client has considerable wealth and a penchant for risky stock investments.
3. Government enforcement action against Florida firm accused of excessive charges in connection with trading accounts. Here costs of firm were shown to be consistent with industry averages.
4. Case involving administration of a trust over a 65-year period by one of the most prominent regional banks in the mid-South. Issue was whether bank had met its duties under the prudent person rule as it had evolved over the years, and whether its investment performance met minimally acceptable standards. Task involved large-scale data entry of 65 years of trading and comparison with market performance of “prudent” portfolios in the various periods.
5. Assisted Chicago Board of Trade, Chicago Mercantile Exchange and the New York Commodity Exchange in a multi-billion dollar case in United States Tax Court in Washington, D.C. that helped establish the law concerning taxation of futures spread positions. Also contributed to the parallel legislative and lobbying effort in Congress and within the Department of the Treasury to clarify this issue.
6. Participated in successful appeals of tax treatment given to trading in Connecticut, Oklahoma, California and elsewhere. Cases included issues of taxation of trading with IRS at the audit level, in appeals and in U.S. Tax Court.