$3 Million of Award is Attorney’s Fees Recovery.
As reported by Gretchen Morgenson in an April 23, 2011 article in The New York Times, arbitrators awarded a total of $54.1 million in a securities arbitration case against Citigroup’s Smith Barney unit in favor of sophisticated investors Gerald D. Hosier, a successful intellectual property attorney, and Jerry Murdock, a venture capitalist. The award broke down, aside from some undisclosed components, roughly this way: $27 million for out-of-pocket losses on the investments; $15 million in punitive damages; $6.3 million in market-adjusted damages; and $3 million in legal fees. Wall Street can’t be happy with this one, with arbitrators apparently rejecting traditional risk-based and disclosure defenses.