Archive for month: April, 2021

By Lynnley Browning – June 9, 2021

Read the article on financialplanning.com

So much for trying to make amends with family.

A multimillion-dollar battle has flared up again between a wealthy Florida grandmother and her two grandsons whom she accused of mishandling her money while working at J.P. Morgan Securities, a new court filing shows.

Beverley Schottenstein, 94, the heir to a retail empire that grew to include stakes in shoe retailer DSW and clothing chain American Eagle Outfitters, moved June 8 to reopen her high-profile lawsuit against her grandsons in a Miami federal court, records show.

Her filing is the first since March 18, when she put on hold her civil lawsuit against brothers Evan and Avi Schottenstein, her grandsons, following an arrangement by the parties to resolve things outside of a courtroom. That truce broke down, and the gloves are now off, according to her latest filing in Florida’s Southern District. Read more

March 18, 2021 – By Pam Krueger

Read the article on MarketWatch.com

Regulations and reforms to protect investors aren’t working and need repair.

This report misidentified the brokerage firm involved in the arbitration settlement. The story has been corrected.

A recent story about a 94-year old woman whose grandsons criminally mismanaged her wealth is just another reminder of how years of attempts to rein in the excesses of the brokerage industry have done little to protect consumers from harm.

For years, Florida retail matriarch Beverley Schottenstein trusted her two grandsons, both so-called financial advisers at brokerage J.P. Morgan Securities, to manage her investments. They exploited her trust by committing various kinds of fraud. According to a complaint Schottenstein filed with FINRA, the private body that oversees the brokerage industry, the grandsons forged her signature on key documents and bought and sold risky and expensive securities without her permission, resulting in losses of more than $10 million while generating hundreds of thousands of dollars in commissions for both themselves and J.P. Morgan. Read more

February 12, 2021 • Karen Demasters

Read the article on fa-mag.com

The matriarch of the billionaire Schottenstein family has been awarded $19 million by the Financial Industry Regulatory Authority for illegal trading in her accounts by J.P. Morgan Securities and two of her grandsons, Finra announced Feb. 5.

The compensation is to be paid to Beverley B. Schottenstein, of Bal Harbour, Fla., by J.P. Morgan Securities, and her grandsons, Evan A. Schottenstein and Avi Elliot Schottenstein, who are brothers and were acting as her brokers. The three defendants have denied the allegations that were described in the arbitration award, according to Finra. J.P. Morgan Securities should have flagged the large sales, Finra said. The grandsons worked at J.P.Morgan Securities in New York City.

The Schottenstein family, which is based in Columbus, Ohio, was once on the Forbes list of 100 wealthiest families in the U.S., but has since dropped off the list. In 2015, Forbes set the family’s wealth at $2.7 billion. The Schottensteins headed a fashion, grocery store, retail mall and home building empire that includes retailers, such as DSW and American Eagle. It is now overseeing the merger of Albertson’s and Safeway as the parent company of the two grocery store chains. Read more

February 9, 2021 – By Ian Wenik

Read the article on citywireusa.com

A panel of arbitrators found that Beverley Schottenstein’s grandsons made unauthorized purchases and sales in her account.

A panel of Financial Industry Regulatory Authority (Finra) arbitrators has ordered JP Morgan and two of its brokers to pay a roughly $19m financial penalty after the brokers were found liable for making unauthorized purchases and sales of securities in their grandmother’s account.

The arbitrators ordered JP Morgan to pay $4.7m in compensatory damages, Evan Schottenstein $9m in compensatory damages and Avi Schottenstein $602k in compensatory damages to Beverley Schottenstein and her trust. JP Morgan has also been ordered to revoke Beverley Schottenstein’s investment in a private equity fund run by Coatue Management and pay her $4.29m plus interest. Evan Schottenstein and JP Morgan have also been ordered to each pay half of Beverley Schottenstein’s attorneys’ fees. Read more

by Jake Martin and Mason Braswell – March 9, 2021

Read the article on advisor hub.com

In a claim zeroing in on the fairness of virtual hearings, a pair of former J.P. Morgan Securities brokers have asked a court to nullify a high profile $19 million award issued last month by a Financial Industry Regulatory Authority arbitration panel.

Brothers Evan A. Schottenstein and Avi E. Schottenstein filed a motion to vacate in U.S. District Court in the Southern District of Florida on Monday alleging that the arbitration process “broke down” over the 43 hearing sessions as the arbitrators dozed off, failed to address a potential conflict and declined to admit an allegedly key piece of video evidence.

The award was tied to a claim for unauthorized trading and elder abuse brought by their grandmother, Beverley Schottenstein, in July 2019. It qualified for vacature under the narrow grounds provided by the Federal Arbitration Act because the arbitrators ‘exceeded their authority’ by refusing the brothers’ request to postpone the hearing until it could be held in-person, they argued in the filing.
Read more