J.P. Morgan Bank Broker Cleared of Coronavirus Crash Claim
An arbitration panel this week threw cold water on a customer’s complaint that J.P. Morgan Securities owed him money for failing to discuss its managed account trading strategy as markets were plummeting in late February and early March when Covid-19 hit U.S. shores.
Levenson did not name his broker in the April 7 claims he filed, and the award document did not specify his damage claims. But in seeking to dismiss the claims, J.P. Morgan asked arbitrators to let advisor Christopher Scibilia expunge all references to the matter from his Central Registration Depository regulatory filings.
Scibilia, a private client advisor at a New York branch of J.P. Morgan Chase Bank, has a single disclosure mark on his BrokerCheck record—a request for $100,000 from a client who alleged the firm did not disclose risks or discuss investment strategies when the value of his managed accounts was plummeting due to the pandemic.
The claim was settled for $3,000, according to the database.
The arbitrators did not rule on Levenson’s underlying claim because he withdrew it in July after agreeing to the settlement, but in granting the expungement request they were blunt about why Scibilia’s record should be cleared.
Levenson’s allegation of being “risk-averse” and interested in “ultra-secure investments” was belied by a proposal summary he signed representing that he was a “moderate aggressive” investor seeking “growth, with current income as a secondary concern,” the arbitrators wrote.
“Furthermore, while Claimant alleged that Scibilia failed to contact him about the market risks connected with the pandemic, the uncontroverted documentary evidence and Scibilia’s testimony show that Claimant was contacted on numerous occasions, beginning on, at least, February 26, 2020, to discuss the impact of the pandemic….[I]t is beyond doubt that the underlying customer complaint was clearly erroneous and the resulting occurrence should be expunged.”
While every Finra arbitration decision is case-specific and cannot be cited as a precedent, the Levenson decision is notable because it deals with an event that failed to generate heat once markets rebounded from their early losses of about 30%, and could put investors on notice about rushing to file for damages.
“Had the market stayed down, we would have seen a tsunami of claims, because brokers, as always, were telling clients, ‘Don’t worry the market is going to come back,’” said Andrew Stoltmann, a plaintiff’s lawyer in Chicago who in March was among those expecting a torrent of customer cases against firms for failing to monitor advisory accounts. “In fact this time, the markets came roaring back. It happened.”
The few Coronavirus Crash cases that are making their ways through arbitration allege shoot-from-the-hip decisions by firms that sold out customers’ margin positions without adequate notice, Stoltmann said.
Levenson, whose web biography says he is a county judge in Atlanta and lists fiduciary and accounting disputes as an area of specialty, did not return several calls for comment about the arbitration decision or how he began working with Scibilia. He did not participate in the expungement hearing, according to the award document.
Scibilia, who has been a broker in New York City for 13 years at Smith Barney and J.P. Morgan Chase, did not return requests for comment left with an associate.
The arbitrators assessed all hearing fees of $2,250 solely against J.P. Morgan, and rejected other claims for damages and fees from both parties.