Boston Investment Advisor Hit with $48 Million Arbitration Award
An investment advisor in Boston has been served with a $48 million arbitration decision in favor of his former clients. The Arbitrator concluded that Lee Weiss breached his fiduciary duties to his clients, retired couple James and Jane Sutow when he advised them to invest in a Polish company that he claimed was poised to revolutionize the industry with a new type of filter.
The award is $18 million with an additional $30 million in treble punitive damages. The Sutows lost close to $20 million in the bad investments, and claimed that Weiss failed to disclose an interest in the company and that his recommendations were ‘grossly’ unsuitable and involved fraud.
The arbitrator cited Weiss’ own testimony as convincing evidence that the fiduciary duty was, in fact, breached. The head of the company Weiss recommended the Sutow’s invest in was a long time friend of Weiss. Weiss did not offer the Sutows any sort of documentation supporting the claims of the company and did not follow typical full disclosure rules.
Weiss admitted in the arbitration that he kept no records pertaining to the cigarette company, and provided information orally to the Sutows. He also did not inform them that he had an investment in the company between $14 and $25 million.
The treble damages are automatic under Pennsylvania law, where the Sutows chose to file their suit in part because the investment firm Weiss worked for maintained an office in that state