SNSFE Client Wins $300,000 from Prudential in NASD Securities Arbitration

n behalf of the successor trustee of the Holt Electric Motor Company Pension Plan, SNSFE recently obtained an arbitration decision from the NASD awarding the pension plan more than $300,000 in damages, including attorney's fees.

The pension plan was sponsored by Holt until 2002, when Revere Electric Supply Company assumed sponsorship of the plan. From 1997 to 2002, Prudential Securities managed the plan's investments, providing various investment services, including identifying appropriate investment managers to invest the plan's assets. During that period of time, the majority of the plan's assets were invested in portfolios managed by three different investment advisers — all of whom operated under Prudential's direction and control. Prudential failed to properly diversify the plan's assets. As a result, a large proportion of the plan's assets were invested in highly risky technology stocks, leading to plan losses of hundreds of thousands of dollars.

In response, SNSFE attorneys filed an arbitration claim against Prudential alleging that: (1) Prudential breached its fiduciary duty to diversify plan assets; and (2) Prudential failed to properly select and monitor the investment advisers. After a lengthy and extensive hearing, SNSFE obtained an award of more than $300,000 for the plan, including a portion of its attorney's fees.

According to Jim Eccleston, the lead attorney for SNSFE, the award "again confirms that plan fiduciaries must act with prudence. Armed with this favorable decision, we fully intend to proceed against other former plan fiduciaries in order to obtain complete relief for the plan from all parties responsible for the plan's losses."

Also representing the pension plan were SNSFE partner Henry Novoselsky and associates April Lindauer and Jeffrey Gershon.