The Donald’s lost 80% of their $60 mil stock portfolio after following the advice of Piper Jaffrawy, which told them to keep their money in Level3 Worldcom stocks well after the tech bubble imploded, the New York Times reports. As of April 18th, 2001, the firm still rated Level 3 a “strong buy,” even though the stock had dropped to $13.06 from $50…
Now they’re suing Piper Jaffray, but doing so through mandatory binding arbitration, per a rider in their brokerage contract, and the hearings have hardly begun before the chicanery and double dealing inherent in consumer disputes resolved by arbitration burst from opportunity to reality onto the proceedings like a hot poison ivy pustule.
Arbitration is like speed-court in that its findings aren’t subject to appeal. Instead of judges and juries, an arbitration committee handles the dealings. Employees of the arbitration firm, usually hired under retainer by the company in cases of consumer disputes, take the place of judge and jury. Under arbitration, arbitration appointees are supposed to disclose any conflicts of interest.
But in the Donald’s case, their personal lawyer found out just four days in advance of the first hearing that the arbitration firm guy that was supposed to represent them, “…represented Piper Jaffray in a 1999 lawsuit, and that in 2002 and 2006, his firm provided legal services to Piper relating to public offerings it helped underwrite.” In the following days, Piper Jaffray’s own legal firm “uncovered” that Mr. Marshall’s firm, “had represented the brokerage firm in 2003 in a case involving three Piper Jaffray brokers.”
Mr. Marshall was removed from the panel, but this guy of good ol boy network shows how high the deck can get stacked against consumers in mandatory binding arbitration dealings and is further proof of why you should write your elected representatives and urge them to support the Arbitration Fairness Act.