Securities Arbitration Clinic at New York Law School Enjoys First Successes

Students Recover Mismanaged Funds for Two Clients,
One Elderly, One Disabled

NEW YORK, February 14, 2006 --- At all levels of society, people who have come into possession of even modest sums of money are being encouraged to invest those sums with financial institutions. Many of these financial companies and the professionals they employ are honest and competent and serve their clients well. But sometimes the opposite is true, and the client’s funds—perhaps a life’s savings or a financial award from a lawsuit—are mismanaged and lost. In such cases, smaller-scale, unsophisticated investors may have difficulty obtaining legal representation to pursue claims against their stockbrokers or financial managers.

New York Law School’s Securities Arbitration Clinic, a relative newcomer to the school’s clinical program, is quickly proving its effectiveness in providing assistance to such investors. The clinic has just announced its first two successful client representations. In one case, the clinic’s students helped an elderly Brooklyn woman, who was misled by a broker, recover over $7000 that had been charged as a commission on the sale of an unwanted annuity. In the second case, the students recovered funds in a settlement for a disabled Manhattan woman whose stockbroker made inappropriate high-risk investments with her limited nest egg.

In the first case, the client, who possessed only a ninth-grade education, had been banking at a particular bank branch since the 1960s. She was approached one day at the bank by a regional broker-dealer who convinced her to invest $100,000—almost 90% of her life’s savings—in an annuity without explaining the product or its risks. The client believed that she was just opening another type of bank account that would earn higher interest. When she realized what she had done, she immediately sold the annuity, but was informed that she would forfeit more than $7000 as a surrender charge.

Law school clinics often represent a last resort for clients in these types of circumstances.

“She would have found it almost impossible to secure the services of an attorney to handle her case due to the size of her claim,” said Visiting Professor Howard Meyers, codirector of the Securities Arbitration Clinic. “But she met the criteria to be a client of our clinic.”

The majority of the work on the case was done by student Antar Jones 3L, with assistance from Michelle Pakula 3L, Matthew Rench 3L, and Kerianne Crooker ’05. A demand letter was sent by the students to the bank asking that the client be refunded 100% of the commission charges, to which the bank agreed.

“Working in the clinic enables us to learn from actual hands-on experience,” said Pakula. “We students function as one big team; Professor Meyers tells us that we are our own law firm, that the clinic is like our firm. It’s great to be able to help clients who can’t afford attorneys on their own or have already used up their resources on a bad attorney. It’s been one of the best experiences of law school.”

The client in the second case did try to secure legal representation, but was turned down by a dozen law firms who regarded her case as too small for them to take on. One firm, however, steered her toward New York Law School’s clinic. The students filed the initial claim with the National Association of Securities Dealers (NASD), prepared the prehearing brief and subsequent discovery motions, and held a discovery conference with the NASD panel chairman. Ultimately, the students fulfilled the client’s wishes and obtained a settlement with the brokerage firm before the matter proceeded to a NASD arbitration hearing.

“I’m very satisfied with the outcome of my case,” said the client, whose identity, like that of the other woman and the brokerage firm and bank, must remain confidential according to the terms of their settlements. “The students made my goals their number one concern. I was in a hopeless state when I first met with them, but they helped restore my confidence in myself. I’m so glad that they are doing this for the community.”

Students who worked on the case include Gerald Brown 3L, Preeti Gupta 3L, Erin Smith 3L, Lauren Snyder 3L, Jared Verteramo 3L, and Lynne Zagami 3L.

Professor Meyers coteaches the clinic with Professor Aleta G. Estreicher. It was established in the fall of 2003 with $200,000 in funding from the office of New York State Attorney General Eliot Spitzer. Spitzer received the funds in a settlement with former Qwest Communications International chief executive Joseph Nacchio, who faced allegations that he improperly received lucrative shares of initial public offerings.

About New York Law School

Founded in 1891, New York Law School is the second oldest independent law school in the United States. Drawing on its location near the centers of law, government, and finance in New York City, its faculty of noted and prolific scholars has built the school’s curricular strength in the areas of tax law, labor and employment law, civil and human rights law, media and information law, urban legal studies, international and comparative law, and interdisciplinary fields such as legal history and legal ethics. New York Law School has more than 11,000 graduates and enrolls some 1500 students in its full- and part-time J.D. program. It is one of only two law schools in the metropolitan area to offer the Master of Laws (LL.M.) in Taxation.