HomeMy WebLinkAbout98-01198
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Fahcnstock & Company, Inc. and, thcrcforc, is hcrcaftcr rcfcrrcd to as Fahcnstock &
Company, Inc.
5. Dcfcndant Kcnncth A. Scyt(Jrt who was an cmploycc ofW.I-I, Ncwbold's and
providcd brokcragc scrviccs to thc public at W,I-I. Newbold's oftiec locatcd at 1015 Mumma
Road, Wormleysblll'g, PA 17043. Kenneth A. Scylel1's address is 138 East Dcllview Drive,
Warsaw, Indiana 4(,480.
h. Whereby Kenneth A. Seyfert was acting within the seopc of his apparent
authority as an agent of Fahenstock & Company, Inc. and Fahenstock & Cornpuny, Inc. had
a duty to adcquatcly supervise Kcnncth A. Seyfert, Fahenstoek & C'ompany, Inc. is
responsiblc for the wl'Ongllil acts of said cmployec; therej()re, Delendants Kcnneth A. Seyfcrt
and Fahcnstock & Company, Inc. arc hcr'Jallcr relerrcd to as Defcndant.
7. Plaintiffs maintaincd account number A09.0005149 (h(~rcaftcr refcrrcd to as
account) with Defcndant from August 3, 1992 to March 10, I ()97. Kcnncth A. Scyfert was
the Plaintiffs' brokcr.
8. Thc statcd objective of the Plaintiffs on thcir account application, attaehecl and
markcd as Exhibit "An, was growth and income. Thc account application also notcd that the
Plaintiffs had no prior expericnce investing in stocks, options or commodities.
9, Tlw account was opcncd by thc Plaintiffs to providc futurc retiremcnt ineomc
for personal, family and houschold purposes.
2
10. The Plainti ffs' portfolio was initially invested primarily In Pennsylvania
l11unicipal filnds, a low risk incomc investmcnt.
II. On the recommendation of Defendant the municipal funds were sold and the
portfolio was moved into speculative and high risk investmcnts beginning in Januury 1996,
Dcfendant did not provide prospectus to the Plaintiffs prior to buying stocks.
12. Defendant called the Plaintiffs frequently in order to get their verbal authority
to make buys and sales of the Plaiatiffs' portfolio, on one occasion calling Robert 1'. Webber
while he wus in the hospital.
13. Defendant recommended securities for which they were thc "maker," without
informing the Plaintiffs of this fact.
14. During the period January I, 1996 to Murch 10, 1997 the uccount was turned
over 5.2 timcs,
15. ^ transfer of $8,539 into the account in August 1996 supplemented the
Plaintiffs' initial capital investment of $119,099.
16. During the period January I, 1996 to March 10, 1997 the value of the account
decreased from $119,099 to $83,309.
17. During the period January 1, 1996 to March 10, 1997 the Defendant made 138
trades on the plaintiffs' account und eurned $30,175,18 in commissions.
3
WHEREFOR":, Plaintiff dcmands judgmcnt against Dcfcndant and I'clicf as
indicatcd bclow:
(a) Dircct thc Dcfcndant to pay an amount in cxccss 01'$35,000, which is
thc arbitration rcquircmcnt, intcrcst bcginning 011 I January 199(J and
a rcasonablc ratc of rcturn bascd on thc Plaintiffs' invcstment goals.
(b) Dircet the Dcfendant to pay punitive damages.
(c) Award Plaintiffs such other relicI' as the Court shall dcem appropriate.
COUNT V
Breach of Contract
36. Thc avermcnts sct forth in Paragraphs I through 18 of this Complaint arc
incorporatcd by refcrenec hercin as though thc samc wcre fully sct forth hcrcin.
37. Dcfcndant had a duty to exccutc his bl'Okcmgc serviccs in accordancc with his
contract with the Plaintiffs, which rcquircd him to make rccommendations consistcnt with
thc Plaintiffs' invcstmcnt objcctivcs of growth and incomc and subsequcntly invcst thcir
flll1ds in this manncr.
38. Nevcrthclcss, Dcfcndant breach cd this contract whcn hc invcstcd in spcculative
and high risk sccuritics.
39. As a dircct and proximate result of Defendant's actions, the Plaintiffs have
suffercd and continuc to suiTer damagcs of decrcased account valuc, cxccss commissions,
intercst and a rcasonable rate ofretul'l1 bascd on the Plaintiffs' investmcnt goals.
WHEREFORE, Plaintiff demands judgmcnt against Dcfcndant unci relief as
s
indicutcd below:
(a)
Dircct the Defcndant to pay $44,329 and intcrcst bcginning on I
January 19%, plusilltercsland a reasonable ratc of retul'll based on thc
Plaintiffs' investmcnt goals,
A ward Plaintiffs such other relief as the Court shall dccm appropriate.
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(b)
COUNT VI
Fraud
40, The avcrments sct forth in Paragraphs I through 18 of this Complaint arc
ineorporatcd by refcrcncc hcrcin as though the samc wcrc fully sct forth hcrein.
41. Dcfcndant Illade r(,prcscntations that transactions wcrc consistcnt with the
Plainti fls' invcstmcnt goals.
42. Dcfcndant's rcprcscntations wcrc thc matcrial considcration in thc Plaintiffs'
dccisions to buy and sell thc sccuritics.
43. Defendant's rcprcscntations wcrc madc knowing that they WCI'\~ not consistcnt
wjth the Plaintiffs' invcstmcnt goals, sincc many werc for high risk and spcculativc
securitics.
44, Dcfcndant's intcnt for having the Plaintiffs rcly on thcir investment
recommcndations was to produce commissions by the resulting transactions and to make the
market for securities their company was thc makcr for.
45. The Plaintiffs justifiably rclied upon the rcprcsentations of the Plaintiffs, given
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EXHIBIT A
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-~ ' TYPES.Of ACCOU
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Account Application
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DOES CLIBNT R sPOUSI HAVE./' 10 CLIENT AN S'" TEE OF
ANrmlERACCClUNTWITliUSl ld~O D ves PANNUTOCUCO. !NC. OR
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INCOIolE $.... () .:>
TIS C' S,OMi" OR REUTION I R PIoRTNO ,IP PARTNERSHIP) A9SOCL'.TBO
WitH SECURITT PlR"', ESCHANOE. INSURANCO CO......NY EANI(,
o INY1IStvENT COIolPANT AND OR INVI!S1'MI",," AOVISOR?
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DIVIOSNOS AND INTRRUT /
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TRAN8pe~ INSTRUCTIONS: ~ER NAM'B IHIP IAI
CU8'!O"'IR NAMI 'HOLD IN BIl III
l 0'''08" A'PIlOW,L
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ROBERT WEBBER and LINDA
WEBBER, Husband and Wife.
Plaintiffs
: IN THE COURT OF COMMON PLEAS
: CUMHERLAND COUNTY
: PENNSYLVANIA
v.
: NO.: 98.1198 CIVIL TERM
FAHNESTOCK & CO., INC..
W.H. NEWBOLD'S SON &
COMPANY and KENNETI I
A. SEYFERT,
: CIVIL ACTION . LAW
Defendants
PRAECIPE
TO THE PROTHONOTARY:
Kindly mark the above matter settled. discontinued. and ended.
SERRATELLl. SCHIFFMAN, BROWN
& CALHOON, PC
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J)',lled: August 31, 1998
tewlll, Schil 'nan,
1.1), No,; 25488
Suile 20 I, :W80 Linglcstowl\ Road
Harrisburg, PA 17110
(717) 540.<) 170
Attorncys for Plaintiff
1,,1111 >MEILI S^II'ETITI( lNlwl'i,brr ,di,
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