By Jake Martin – June 9, 2021
Negotiations have broken down to settle a multimillion dollar, intrafamily dispute between retail matriarch Beverley B. Schottenstein and her grandsons, former J.P. Morgan Securities brokers accused of unauthorized trading in her account and elder abuse, according to a court filing.
Attorneys for the nonagenarian petitioner on Tuesday filed a motion in U.S. District Court in the Southern District of Florida seeking to reopen the case to confirm her high-profile $19 million arbitration award, rendered in February by a panel of Financial Industry Regulatory Authority arbitrators against her grandsons, Evan A. and Avi E. Schottenstein, and their former employer.
A written agreement of settlement has failed to materialize despite an oral agreement the Schottensteins had reached in March, according to the filing.
“After extensive negotiations, the parties have been unable to reach agreement on the provisions and content of a written settlement agreement, and no written settlement agreement has been finalized,” Tuesday’s filing said.
The dispute at this point is solely a family affair as J.P. Morgan Securities (now operating as J.P. Morgan Advisors) has, according to the filing, paid “all of its financial obligations” to Beverley Schottenstein under the Finra award, which held the firm responsible for $4.7 million in compensatory damages and also ordered it to pay $4.3 million to unwind an investment in a Coatue Private Equity Fund and $172,631 in costs.
In March, the younger Schottensteins, who are brothers, had opposed their grandmother’s petition to confirm the arbitration award in court and sought to vacate the award, which had held the former brokers liable for $9.8 million of the total.
The lion’s share of the burden was placed on Evan, who in April was barred from the industry over the underlying allegations in the dispute, while Avi, who is not currently registered with a Finra member firm, was on the hook for $602,251 in compensatory damages.
After the parties indicated they had reached an “oral agreement concerning the amount of a settlement sum” to be paid to Beverley Schottenstein by the respondents, the court on March 19 had ordered the case closed administratively, without prejudice. The order gave leeway for the parties to reopen the case if they failed to finalize a written settlement agreement or comply with an agreed payment schedule.
Beverley Schottenstein’s lawyer Scott Ilgenfritz, a partner at Johnson, Pope, Bokor, Ruppel & Burns in Tampa, Florida, did not respond to a request for comment. The former brokers’ lawyer, Peter S. Fruin with the Birmingham, Alabama law firm Maynard Cooper & Gale, also did not respond to a request for comment.
Tuesday’s filing noted that counsel for Beverley Schottenstein spoke with counsel for the respondents on June 8 “to attempt in good faith to resolve the issues raised by the motion” but had been “unable to do so.” They were also informed by the former brokers’ counsel that they will “oppose the relief sought in this motion,” the filing said.
Evan and Avi Schottenstein worked at J.P. Morgan Securities from 2014 to the summer of 2019, when Evan was terminated over “[c]oncerns relating to trading activity for the account of a family member, and the accuracy of the records regarding the same,” according to his BrokerCheck record. Avi also left the firm at that time, according to the database. The brothers had both worked out of J.P. Morgan Securities’s Park Avenue office in New York City.
A spokeswoman for J.P. Morgan did not respond to a request for comment on the payments or whether it would have a role in any of the ongoing legal proceedings to follow.