Broker-Dealer Litigation - Greenberg Traurig LLP

are wanton and reckless when done in a manner “showing heedlessness and an utter disregard for
the rights and safety of others.” The court found that the trustee sufficiently alleged
“heedlessness and utter disregard” because defendants ignored numerous red flags and
irregularities in order to enrich themselves at the expense of customers.
Hosier v. Citigroup Global Mkts., Inc., 2011 U.S. Dist. LEXIS 146670 (D. Colo. Dec. 21, 2011).
Petitioners filed a Statement of Claim with FINRA seeking to recover losses from
investments they made with Citigroup. Petitioners requested $48.1 million in compensatory
damages, along with punitive damages, attorneys’ fees and costs. The FINRA panel awarded
compensatory damages in the amount of $33.9 million, punitive damages in the amount of $17
million, and attorneys’ fees in the amount of $3 million. Petitioners asked the court to affirm the
award, while Citigroup filed a motion to vacate the award. Although Citigroup argued that the
panel provided no basis for the punitive damages award, the court found that the panel did not
exceed its authority by awarding punitive damages because the Arbitrator’s Guide does not
obligate arbitrators to include the basis for punitive damages in an award. Additionally, the court
observed that the panel had no obligation to request that the parties brief the issue of punitive
damages as the Arbitrator’s Guide recommends additional briefing only if the “panel needs
additional information.”
MBIA Ins. Corp. v. Credit Suisse Sec. (USA) LLC, 927 N.Y.S.2d 517 (N.Y. Sup. Ct. 2011).
Insurer filed suit against financial services group and affiliated entities claiming that it
had been fraudulently induced to enter financial guaranty insurance policy, guaranteeing
payments on $900 million in securitized residential second mortgages held in trust that issued
mortgage-backed securities. The insurer sought damages - including punitive damages -
incurred from alleged breach of contractual representations and warranties, as well as other
breaches of contract. The court held that the insurer’s claim for punitive damages due to the
alleged fraudulent inducement was not actionable, where the insured’s alleged
misrepresentations were either puffery, duplicative of breach of contract claims, or not
sufficiently alleged.
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4. Attorneys’ Fees and Costs
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Indah v. SEC, 661 F.3d 914 (6th Cir. 2011).
The Sixth Circuit held that the district court committed plain error by awarding costs and
attorneys’ fees based on conduct not raised in one of the defendants’ motions for sanctions. The
plaintiffs brought an action asserting security claims and other claims against the defendants
relating to the alleged conversion of Indonesian mines. The Sixth Circuit found that the lower
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