After losing arbitration, brokers file bankruptcy

investmentnews.com:

A month after losing a $2.6 million Financial Industry Regulator Authority arbitration claim, two of the brokers named in the matter have declared bankruptcy, meaning the client who sued them – and won – likely won’t see money any time soon, if ever.

Ron Yehuda Itin is the president and owner of a small broker-dealer E1 Asset Management Inc., based in Jersey City, N.J., and the broker named in the arbitration was Shaun Grimaldi.

On April 3, Eagle 1 Asset Management, Yehuda Itin and Grimaldi were on the losing end of an arbitration decision made by a three person panel, working under the aegis of Finra Dispute Resolution. The client Alban Wilson, had sued the firm and the brokers for a variety of reasons, including securities fraud, negligence and failure to supervise.

Wilson asked for $4 million in damages. The three Finra panelists instead awarded Wilson $1.6 million in compensatory damages; interest of $578,000; and legal fees of $420,000.

“I really do view these issues at broker-dealers as tip of the iceberg,” said Michael Bixby, a plaintiff’s attorney. “It’s business as usual for many firms, and we just see the smallest part of it in these arbitration claims. But the harm that’s done is astronomically bigger than what’s visible.” 

According to their BrokerCheck profiles, Yehuda Itin and Grimaldi filed on Friday for Chapter 7 bankruptcy in federal court in Newark, N.J.

A message left on Tuesday for Eagle 1 Asset Management was not returned. Jonathan Uretsky, an attorney for Eagle 1 Asset Management, Yehuda Itin and Grimaldi, also did not return a call Tuesday to comment.

When brokers file for bankruptcy, they are no longer personally liable in lawsuits, such as Finra arbitration awards. Critics of the Finra