Bear Stearns Loses 3.9 Million Dollars Customer Case
Bear Stearns and a former broker in its San Francisco office were ordered to pay a client 3.9 million dollars by a Pacific Stock Exchange arbitration panel. The February decision upheld the client's contention that broker Preston Hammer made unauthorized trades on margin in 1998.
According to the award summary, claimant Alan Olsen alleged that Hammer covered up his fraudulent trading by faxing Olsen fictitious statements. In the end, Olsen claimed he not only lost his initial stake of 2.5 million dollars, but ended up with a debit balance of 67,000 dollars.
Bear Stearns did not respond to a request for comment.
The three-person arbitration panel declined to punish Hammer's branch manager Richard LaVoice, and instead faulted Bear Stearns' "inadequate [supervisory] policies and procedures."
Olsen's attorneys, Brian Zagon and Robert Gonser in Lafayette, Calif., say Bear Stearns has paid the award.
Hammer left Bear Stearns in late 1998, a month after Olsen claimed his account had been liquidated to meet margin calls.
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