A panel at the Pacific Exchange awarded over $1.2 million in damages and interest to four employees of Cisco Systems who incurred damages in their national brokerage firm’s accounts as a result of their broker’s recommendation to exercise thousands of non-qualified Cisco stock options utilizing margin. The subsequent decline of the price of the Cisco shares resulted in hundreds of thousands of dollars in damages in the form of the decline of the stock and margin interest. The Pacific Exchange arbitration panel assessed liability for breach of fiduciary duty, failure to supervise, unauthorized trades and breach of contract.
