Reuters: Regulatory News: Investment adviser must pay Schwab $4.1 mln for options error

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Investment adviser must pay Schwab $4.1 mln for options error Apr 22nd 2013, 17:51 By Suzanne Barlyn April 22 | Mon Apr 22, 2013 1:51pm EDT April 22 (Reuters) - An Arizona-based investment adviser must pay a unit of Charles Schwab Corp a total of slightly over $4.1 million in damages stemming from an options trading error, according to a securities arbitration panel ruling. A Financial Industry Regulatory Authority arbitration panel on Friday ordered Scottsdale-based Private Client LLC and its head, Timothy Moran, to pay the sum to Charles Schwab & Co Inc, which alleged the two were negligent in placing two options orders, according to the ruling. Private Client and Moran did not immediately return a call requesting comment. A Schwab spokesman declined to comment. Schwab provides custodial and brokerage services to thousands of investment advisers who register with the U.S. Securities and Exchange Commission and state securities regulators. Schwab alleged it incurred $3.4 million in losses because of incorrect trading instructions placed by Private Client and Moran. FINRA arbitrators ruled that Schwab proved its case "by a preponderance of the evidence." In addition to awarding Schwab $3.4 million in damages, arbitrators also ordered Private Client and Moran to pay $572,000 in interest and $147,000 in legal fees. The arbitration ruling posted Monday on FINRA's database did not include an explanation for the decision, although arbitrators wrote that they provided one to the parties.

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