An arbitration panel said CASE Credit Union is entitled to $1 million from Prudential Equity Group LLC for alleged losses it suffered as a result of investing in collaterized mortgage obligations.
According to the Financial Industry Regulatory Authority award dispute resolution signed on May 14, the $180 million CASE CU alleged that its investment committee met with Mark Wickard, an agent of Prudential Equity, to discuss the Lansing, Mich.-based CU's portfolio. Wickard said investing in CMOs and interest-only strips were "safe and suitable," according to CASE. The CU said shortly after making the investments, they began to show a loss, never recovered and were sold at a loss through another broker.
Prudential Equity denied the allegations, saying it acted in good faith and any alleged
damages sustained by CASE were the result of market forces and the result of actions and omissions of individuals, entitles and conditions over which it had no control.
CASE sought $3 million in actual and compensatory damages. After reviewing the case, the three-member arbitration panel ruled Prudential Equity to pay $900,000 in compensatory damages, $48,443 in interest, $30,000 in costs, and $50,000 in attorney fees. Prudential Equity must also pay $124,000 in fees to the FINRA dispute resolution panel to conduct case's hearing sessions.
A comment was not immediately available from CASE CU or Prudential Equity.
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