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Fidelity should pay roughly $1.3 million combined to two sets of clients who alleged the financial services giant breached its fiduciary duty, among other violations, in connection with structured product sales, an industry arbitration panel recently decided.
The Financial Industry Regulatory Authority arbitrators, in a decision posted Tuesday, found Fidelity liable for nearly $1.29 million in damages and about $19,000 in fees, with one client family due to receive nearly $843,000 and another $445,246 in compensatory damages.
James and Tina Baldocchi, in connection with their investments in structured products, claimed negligence, breach of contract, breach of fiduciary duty, breach of securities industry rules and regulations, and legal violations by Fidelity Brokerage Services, the decision noted. The other clients, Kimberly Hosler and James Doorley, asserted the same violations.
Fidelity denied the allegations, according to the decision, which didn't provide details on the sales.
Broadly, structured investment products, generally linked to underlying assets, seek enhanced returns or other specific goals, may or may not offer some downside protection, and are often considered risky.
In a separate decision also posted Tuesday, FINRA arbitrators ordered Fidelity to restore $9,873 to a customer's IRA, which had been hacked. The client alleged alleged that after informing Fidelity his account was hacked, the company refused to return the stolen funds and related federal withholdings. Fidelity defended itself against the allegations.
Submitted documents contain no evidence that the client granted anyone access to his account, FINRA said, noting Fidelity declined to restore the funds despite the customer's repeated requests and timely notice about the fraud.
Fidelity representatives didn't immediately respond to an email seeking comment about the cases on Friday.
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