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Securities Law

During the past three decades, Mr. Whiteman has represented hundreds of investors in lawsuits and arbitrations involving securities law issues. He is experienced in complex federal and state court litigation and in individual customer arbitrations filed with FINRA Dispute Resolution and its predecessor, the NASD. Mr. Whiteman’s cases have involved fraudulent investment offerings, unsuitable recommendations, excessive trading, negligence, and failure to execute trading instructions.

Mr. Whiteman’s reported cases are listed below:

Court Decisions

Newman v. First Montauk Financial Corp., 2010 WL 2933281 (E.D.N.C. July 23, 2010).

This case involved claims by two North Carolina residents against a New Jersey broker-dealer and its principals over an investment in a tenant-in-common offering sponsored by a shopping mall in Houston Texas. The defendants asserted third-party claims against the plaintiffs’ lawyers and the local securities broker for one of the plaintiffs. The court granted the motion to compel arbitration made by two of the third-party defendants, Edward D. Jones & Co., LP and Mark McLamb.

Van Pelt v. UBS Financial Services, Inc., 2007 WL 2997596 (W.D.N.C. October 12, 2007).

A NASD arbitration panel awarded over $2 million of damages to Van Pelt, a former employee of UBS, then known as PaineWebber. The Court denied the motion of UBS to vacate the arbitration award and granted Mr. Van Pelt’s motion to confirm the award.

Walnut Street Securities, Inc. v. Lisk, 497 F.Supp.2d 714 (M.D.N.C. 2007).

A Magistrate Judge recommended that the court deny the plaintiff’s motion to vacate an arbitration award and grant the respondents’ motion to confirm the award. The district court judge later adopted the recommendation of the Magistrate Judge.

Van Pelt v. UBS Financial Services, Inc., 2006 WL 16988161 (W.D.N.C. June 14, 2006).

The court denied the motion of the defendant for permission to conduct discovery into the possible bias of one of the three arbitrators. The court ruled that UBS had waived its right challenge the arbitrator by failing to request information from the arbitrator during the arbitrator selection process and by failing to request recusal of the arbitrator as provided in the arbitration rules.

Watts v. Slough, 163 N.C.App. 69, 592 S.E.2d 274 (2004).

In this case, the plaintiff alleged that the defendant sold her a fraudulent investment in telephone switching equipment. In the appeal, the defendant challenged the trial court’s grant of partial summary judgment to the plaintiff on two of her claims. The North Carolina Court of Appeals ruled that the trial court’s decision was not immediately appealable.

GE Investment Private Placement Partners II v. Parker, 247 F.3d 543 (4th Cir. 2001).

Investors in a mobile home manufacturing company brought suit against the company and its principals. The Court of Appeals ruled that the plaintiffs had not stated a claim under the Racketeer Influenced and Corrupt Organizations Act, known as RICO, and that the district court did not abuse its discretion by denying plaintiffs’ leave to amend and dismissing plaintiffs’ pendent state law claims.

The Jay Group, Ltd. v. Glasgow, 139 N.C. App. 595, 534 S.E.2d 233 (2000).

The buyers of a corporation brought a lawsuit against the corporation’s president and the corporation’s attorney and law firm. The buyers alleged that the defendants failed to inform them that trademarks allegedly owned by the corporation were held by another entity and could not be registered. The Court of Appeals ruled that the lack of disclosure by the defendants was not the proximate cause of the plaintiffs’ alleged damages.

Resolution Trust Corporation v. Bernard, 1995 WL 17164886 (August 8, 1995).

This case arose out of the savings and loan crisis of the 1980s. The Resolution Trust Corporation, a quasi-governmental entity established to act as receiver for failed savings institutions, was appointed to serve as receiver of Preferred Savings Bank. The RTC brought suit against former directors and officers of Preferred for mismanagement. The court denied the defendants’ motion to dismiss.

In re Wolf Financial Group, Inc. v. Hughes Construction Co., 1994 WL 913278 (Bankr. S.D.N.Y December 15, 1994).

The debtors allegedly operated a boiler-room securities sales operation in multiple states. In this adversary proceeding brought in bankruptcy court, the debtors sought to enjoin the prosecution of approximately seventy civil actions and regulatory proceedings pending against them and several former employees. Several of the defendants, including the NASD, opposed the request, and the NASD moved to dismiss the complaint. The court denied the NASD’s motion to dismiss and the debtors’ motion for a preliminary injunction.

Horton v. Merrill, Lynch, Pierce, Fenner & Smith, Incorporated, 855 F.Supp. 825 (E.D.N.C. 1994).

The court approved the settlement of this class action as being fair, reasonable and adequate to the class.

Arbitration Decisions

Elizabeth D. Stancil v. First Citizens Investor Services, Inc., Case No. 14-03574.

An arbitration panel appointed by the Financial Industry Regulatory Authority (“FINRA”) ordered First Citizens Investor Services, Inc. to pay Elizabeth Stancil $985,000 in a case involving claims of wrongful termination and defamation. In addition to the compensatory damages, the panel found that the reasons for the termination stated by First Citizens in filings with FINRA were defamatory. The panel ordered FINRA to delete the defamatory references on Ms. Stancil’s Form U-5 and that the termination explanation on Ms. Stancil’s U-5 be changed to “terminated without just cause.”

Harvey William Jester, Jr. vs. UBS Financial Services Inc., Case No. 10-05144.

The case involved a claim that the claimant’s brokerage firm failed to purchase the annuity that was sold to the claimant. After the case settled, the respondent moved for expungement of the claim from the stockbroker’s U-4. The panel granted the request over the claimant’s objection.

Harry M. Leete vs. G.A. Repple & Company, Case No. 10-02460.

The arbitration panel awarded damages to Mr. Leete, who purchased a DBSI real estate offering promoted by the respondent broker-dealer.

Victoria Carey and Paul Carey vs. Genworth Financial Securities Corp., Case No. 09-01924.

The arbitrators awarded Mr. and Mrs. Carey damages that resulted from Genworth’s negligent recommendation of the Oppenheimer Champion Income Fund.

Hermon Smith and Rosemary Smith vs. Genworth Financial Securities Corp., Case No. 09-03797.

Another Oppenheimer Champion Income Fund case.

James E. Wortman vs. Uvest Financial Services Group and Sovereign Advisers, Case No. 09-01591.

The plaintiff, a physician, sought to recover damages due to the stockbroker’s recommendation of investments in Fannie Mae and Freddie Mac preferred stock immediately prior to the stock market collapse that began in September 2008.

Patricia E. Murphy vs. James T. Patten, et al., Case No. 06-03931.

After a lengthy hearing, the panel awarded damages to Ms. Murphy. The broker was later convicted in federal court and imprisoned for submitting a bogus account statement to Ms. Murphy to hide the losses in her accounts.

Carolyn Hunter Dickerson Revocable Trust vs. RBC Centura Securities, Inc. and Carlo Walter Oldani, Case No. 05-00559.

Mr. Whiteman served as panel chairman in this arbitration.

Kwen-Jen Chang and Jane P. Chang vs. UBS Financial Services, Case No. 09-01382.

The panel awarded damages to this couple, who purchased Lehman Brothers structured notes through UBS.

Charles T. Deering vs. GunnAllen Financial, Inc., Case No. 06-01847.

The claimant received an award for account churning by the respondent broker-dealer.

Phillip D. Huber v. Sterne, Agee & Leach, Inc. and Sterne, Agee & Leach Group, Inc., Case No. 04-6800.

The claimant, a former Sterne Agee employee, recovered damages based on a formula contained in his employment agreement.

Edward H. Guarnieri v. Robert Cuillo and GunnAllen Financial, Inc., Case No. 04-06545.

Mr. Whiteman served as the arbitrator in the case.

Carolyn C. Tyson v. Triad Advisors, Inc. and Richard A. Corley, Case No. 03-03252.

The claimant’s claim of negligent investment advice was rejected by the arbitrators.

Melva J. Thompson and Clement Thompson v. J.J.B. Hilliard, W.L. Lyons, Inc. and C. Mark Hall, Case No. 03-01966.

The claimants, an elderly couple, entrusted their investment holdings to Mark Hall, a broker who was later imprisoned for stealing from his securities customers. The arbitrators ruled in favor of Mr. and Mrs. Thompson.

The Oceans Company and Bobbie Gray Roberts, IRA v. Prudential Equity Group, Tracey Hauth and Robert E. Bratcher, Case No. 02-00930.

The claimants were awarded damages for account churning by the broker.

Zindall R. Seagroves v. Edward D. Jones & Co., Case No. 02-01851.

The arbitration panel ruled in favor of the respondent in this case. The claimant alleged that Edward Jones made unsuitable recommendations for the investment of his personal injury settlement.

Thomas R. Deimler and Shirley A. Deimler v. Edward D. Jones & Co., L.P., Case No. 02-00229.

Mr. and Mrs. Deimler recovered damages resulting from the unsuitable investment of their retirement savings by their Edward Jones broker.

Anne E. Oleszek and Pursuit Health Formulas, Inc. v. Donald & Co. Securities, Inc., Yefim Jeff Bassin and Stephen A. Blum, Case No. 01-06209.

The arbitration panel awarded claimant’s requested damages against the broker-dealer, Donald & Co. Securities, Inc.

Sharon C. Norton and Dominion Properties, Inc. v. Salomon Smith Barney, Inc. and Robert C. Bock, Case No. 01-02947.

The claimants, a mother and her son, were awarded damages that resulted from the respondents’ unsuitable investment recommendations.

Steven Dawson and Tracie Myatt vs. UBS PaineWebber, Inc., Case No. 00-03169.

The panel made a partial award to two plaintiffs who invested in an IPO stock offering and sought to protect the value of their stock with options.

Robert F. Stout and Katherine A. Stout v. Foster Jeffries Securities, LLC, et al., Case No. 99-03115.

Mr. Whiteman served as an arbitrator in this case.

First Citizens Bank, Executor of the Estate of Cathryn T. Childers v. James G. Tarrant and Prudential Securities Incorporated, Case No. 98-02239.

In this case, the panel awarded damages to the estate of a woman whose investment broker churned her account before she died.

Container Products Corporation v. Interstate/Johnson Lane Corporation, Case No. 97-05995.

The claimant recovered an award of damages from its broker-dealer.

Herring Swine, Inc. v. Sterling Foster & Co., Inc., et al., Case No. 97-03497.

Damages were awarded to the claimant, who alleged that the respondents were participants in a fraudulent investment scheme.

Rosie Godwin vs. Olde Discount Corporation, Case No. 97-01655.

The claimant, a former state employee, lost her modest life savings through the misconduct of Olde Discount. The panel ruled in her favor and awarded damages.

Guy P. Jackson Trust v. Capital Investment Group, Inc., et al., Case No. 96-03142.

The broker, John Bryant Davidson, was convicted of stealing money from Mr. Jackson’s trust account and was sentenced to prison. Mr. Davidson was in prison at the time of the arbitration hearing. The other defendants settled. The panel awarded damages to Mr. Jackson against Mr. Davidson.

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