NEW YORK (Reuters) - A former financial planner, who is serving an eight-year prison sentence for stealing from clients, has been ordered to pay Charles Schwab Corp <SCHW.N> $2.75 million by an arbitration panel.
The case began with a claim against Schwab brought by the father-in-law of Matthew Weitzman, the imprisoned adviser who was a former principal at AFW Asset Management in the New York City suburb of Purchase, NY.
Burton Langer, the father-in-law, accused Schwab of unauthorized transfers of securities, and requested damages of $8.4 million plus interest and attorneys' fees from the firm as well as from the Weitzmans, as third-party respondents in the arbitration claim. Schwab has a large business acting as custodian of accounts for independent registered investment advisers.
A Financial Industry Regulatory Authority arbitration panel instead ordered Matthew Weitzman to pay Schwab compensatory damages of $2.75 million plus interest of 9 percent a day until the award is paid in full.
Schwab, in a counterclaim, had requested an award from Langer equal to whatever it might be found liable for, and also requested a similar sum from Weitzman and three times the sum from his daughter Susan Weitzman. It also asserted breach of contract and aiding and abetting by Langer.
As is customary, FINRA arbitrators did not give reasons for their decisions.
The arbitration panel, which signed the decision on June 18, said Weitzman has not filed the proper arbitration dispute papers but "is bound by the determination of the panel on all issues submitted."
It said that it made no determination about Langer's claims against Susan Weitzman because a New York County court in December 2010 stayed the arbitration against her.
An attorney representing Langer declined to comment on the decision, while a lawyer for Susan Weitzman could not be reached.
A spokesman for Schwab said he could not comment on the award nor on the likelihood of being able to collect from the prisoner.
When Matthew Weitzman was sentenced in early 2010, his lawyer Marc Mukasey expressed disappointment with the length of the 97-month sentence, saying his client's efforts to repay $7.1 million to his victims was "laudable and deserving of credit."
Mukasey, a partner at Bracewell & Giuliani in New York, said Tuesday evening that he no longer represents Weitzman and declined to comment on any aspect of the arbitration award.
Dow Jones reported on the FINRA award earlier on Tuesday.
(Reporting by Jed Horowitz; Editing by Bob Burgdorfer and Ryan Woo)