LOS ANGELES (CN) – An elderly, Mandarin-speaking couple accuses Wachovia Securities of financial elder abuse. They claim Wachovia employee Anita Peterson “virtually wiped out” their $1.3 million account after persuading them to liquidate their certificates of deposit so Peterson could put it into mutual funds “which would then be used as collateral for her to trade in options.”
Plaintiff William Huang is 87 and blind. His wife is 74. Neither is fluent in English, according to their complaint in Superior Court.
The complaint states: “Unfortunately, the Huangs had no understanding of what it meant to trade options using leverage in a margin account, and defendants made no effort to ensure that plaintiffs understood the nature of these investments or the extreme risks associated with this type of speculative trading. In fact, to make matters worse, defendant Peterson specifically represented and promised that: a) plaintiffs’ account would be managed in a manner that was consistent with their conservative investment objectives of income generation with safe appreciation from that income; b) their account would be a ‘safe business investment’ and there was ‘no risk’ with the investment … f) that if there were any decreases in account value, these decreases would be more than offset by the premiums generated from the options, which she constantly monitored. Peterson specifically represented that she would always sell before any decline in value of an option exceeded the premium she had earned plaintiffs on that option …”
Notwithstanding these promises, the Huangs say, their “account was subjected to leverage of more than $6 million with insufficient cash in their account to cover these positions. Not only is this a violation of defendant Wachovia’s own internal policies and procedures, but it also is a material breach of industry standards and the duties imposed thereby.”
The Huangs say their account “was so highly leveraged that it was virtually wiped out when the oil market collapsed” in trading between April and October 2008.
“Plaintiffs are informed and believe that defendant Peterson traded in this manner in order to benefit from the increased commissions to both herself and defendant Wachovia.”
The Huangs seek punitive damages for financial elder abuse, fraud, breach of fiduciary duty, negligent misrepresentation, and negligent supervision. They are represented by Alton Burkhalter.