Ali's legal eagles fought his case on a shoestring and at some risk as a
win/payer.
They may have kicked off a trend if not a feeding frenzy.
Investors queue to sue brokers
By Michael Bachelard
November 09, 2002
A JUNIOR real estate agent who spectacularly failed to get rich quick on
the stock market has joined the string of disappointed investors suing
their former brokers for millions of dollars.
Michael Paproth, who was 22 at the time and in his first job, raised
$171,000 between June and December 1999 to play the market, partly by
convincing his father to obtain an $80,000 mortgage on his house.
But by December 2000, the money was gone after $8 million of trades had
been made in his name, and Mr Paproth owed his broker, Credit Suisse First
Boston, $30,000.
Now Mr Paproth has become the eighth client of law firm Slater & Gordon to
sue stockbrokers for losses, and the first to sue CSFB. He is seeking up to
$300,000 in damages, plus exemplary damages of up to $200,000.
The claim comes seven months after a Victorian judge awarded Fijian farmer
Liyakat Ali $1 million, including exemplary damages, when rogue broker
Chris Martin of Hartley Poynton gambled away his life savings.
Mr Paproth's statement of claim, lodged in the Victorian Supreme Court
yesterday, alleges that CSFB broker Jason Andor boasted he was one of the
best dealers in Australia, that his 80 clients made $1000 a day, and that
he was so good he had been headhunted into his job. All were lies, the
claim says.
Mr Paproth invested an initial $36,000, then followed it up with $110,000,
of which he had secured $80,000 by mortgaging his father's home. In
December, 1999, he put in another $25,000.
The claim says Mr Paproth wanted "safe and secure" investments, but Mr
Andor pushed him to accept a "trading" approach. Mr Andor allegedly traded
more than $8 million worth of shares, and in one period charged brokerage
fees of $152,967. He then allegedly charged Mr Paproth personal commissions
of $21,000.
The suit accuses Mr Andor and his employer of failing to act in good faith,
failing to provide full accounts, conflict of interest, excessive trading,
or "churning", and misleading and deceptive conduct.
Slater & Gordon solicitor Cam Truong said since the Ali case changed the
ground rules in the broker-client relationship, his firm had made up to
eight claims, all but one against Hartley's, and taken 24 serious queries.
Challenger First Pacific Limited is also named in the action after it
bought CSFB's retail brokerage arm in January. According to the statement
of claim, it thereby assumed its liabilities.
Mr Andor stopped working for the company in mid-2001.
A Challenger First Pacific spokeswoman claimed the sale agreement with CSFB
had "totally indemnified us against all costs".
CSFB declined to comment.
http://www.theaustralian.news.com.au/common/story_page/0,5744,5451803%255E2702,00.html
