Arizona Retiree Wins GM Preferred Stock Case

A Tucson, Arizona FINRA arbitration panel sided with a 74 year old Tucson retiree in her claim against Smith Barney (Citigroup) where she alleged that too much of her money was invested in General Motors preferred stock, according to an article by The Arizona Daily Star. Joanne Bohnke asserted that the investments were unsuitable and inappropriate; that there was a breach of fiduciary duty and a failure to supervise. Her claim was for $150,000.

The Financial Industry Regulatory Authority (FINRA) panel awarded $101,000 in compensatory damages, $35,112 in attorneys’ fees and assessed all of the $6,750 in forum fees against Citigroup. (FINRA# 09-05070; Joanne Bohnke v. Smith Barney, Inc. a/k/a Citigroup Global Markets, Inc.)

According to the article, in 2005 Ms. Bohnke’s broker invested $146,500 in General Motors preferred stock without her consent, which meant that over 46% of her life saving was invested in one stock. Given her age and station in life, her limited financial resources and her low tolerance for risk, the panel felt that this represented an unsuitable and overly concentrated investment. Of particular interest is the fact that the GM preferred shares were rated just about “junk” status and her broker told her she was “locked in” to the investments and could not get out, which was false. After GM filed for bankruptcy in June 2009, Bohnke lost 76% of her investment.

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