Stanford Professor Stung by Fund Wins $2.2 Million
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A First Republic Bank unit was ordered to pay a retired Stanford University professor and his wife $2.18 million after arbitrators found the firm gave them only a “fleeting and slapdash” explanation of a municipal bond fund that imploded during the credit crisis in 2008.
Eight months after Elliott and Rhoda Levinthal entrusted $3 million to a leveraged investment vehicle called TW Tax Advantaged Fund LLC, it collapsed, an American Arbitration Association panel wrote in a July 2 ruling. Evidence shows workers at First Republic didn’t try to fully grasp risks in the fund they designed, the panel found. The firm also inadequately trained a saleswoman who dealt with the Levinthals, and didn’t ensure they understood the investment.