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$16-plus million Settlement Due in FINRA Dispute Settlement

Friday, July, 10, 2015


A FINRA arbitrator ordered a BNP Paribas SA unit to pay $16.6 million to London-based couple James and Margaret Eringer, who accused the financier of cheating them with an investment product. BNP Paribas SA typically sells to hedge funds and institutional clients, but FINRA found them guilty of gross negligence and civil fraud. BNP issued a public statement claiming it disagreed with and was deeply disappointed in the decision that came from FINRA.

 

The ruling came after nearly five years and included $16.1 million in compensatory damages. It was the original amount requested by the couple, plus interest. The couple had inherited the money when one of their parents sold a bakery. In addition to the settlement, BNP was also ordered to pay half a million dollars in a sanction fee or failing to comply with orders about exchanging information during the proceedings.

 

The Eringers were advised to set up a company by BNP Paribas in order to buy the investment product with personal funds. BNP stated this was professional and appropriate for the investments. The Eringers placed more than 60% of their assets into the product and were later devastated to learn it had become worthless in less than two years. In addition to losing their investment, they had also paid BNP Paribas $2 million in fees and costs.

 

James Eringer was also required to sign an agreement representing that he was an investment adviser, despite having no professional experience or licenses in the field. BNP made no statement about this detail.