Newsday (May 03, 2002)
NYSE Probes Widow’s Claim
Blames broker for losses
By Mark Harrington
Staff Writer
In a case that drops names from Prince Charles to “the president,” a Hauppauge widow and her family have filed a $4.5-million arbitration claim against Merrill Lynch & Co. and a broker who is the sister of Global Crossing founder Gary Winnick charging they were improperly steered into risky investments in the bankrupt company’s stock.
The filing has drawn the interest of the New York Stock Exchange, which is investigating the claims, according to a source with knowledge of the probe. The NYSE declined to comment. The case also has perked the ears of the New York attorney general’s office, which is already investigating securities firms’ stock recommendations. “We’re aware of it,” said attorney general spokesman Brad Maione.
Florence Platzer, 70, and other family members allege in their claim that Susan Brody, a broker in Merrill Lynch’s Bayside office and a longtime friend of the Platzers, weighted their portfolio heavily to “unsuitable” technology stocks, particularly shares of Global Crossing; falsified investment documents, and violated Merrill’s own investment guidelines. The practices ultimately cost the Platzers $1.4 million in losses from the $2.9 million they deposited in Merrill Lynch accounts, according to the claim.
Merrill Lynch denied the claims.
“It is disappointing to see Mrs. Platzer unfairly attack a longtime friend who provided service to her over many years,” said Joe Cohen, a Merrill Lynch spokesman. “Mrs. Platzer is an experienced investor who is now attempting to blame others for investment losses that were very much a result of her own decisions.”
Meanwhile, Brody’s hairdresser, Glenn Alpern, who has made claims similar to Platzer, claiming losses of about $25,000, has retained an attorney but hasn’t filed a case yet, said Alpern yesterday.
Global Crossing, which laid a sprawling fiber-optic network around the globe, once traded above $60 but is now virtually worthless following the telecommunication firm’s February bankruptcy filing.
Platzer’s filing claims Brody was among Merrill Lynch employees involved in the sale of shares of Asia Global Crossing when it went public, and that she encouraged Platzer to take out a new mortgage with Merrill Lynch, whom Platzer claims she relied on heavily since 1996, when her husband Kenneth Platzer died.
The claims may not stop there. Christine Bae, the Platzers’ Manhattan attorney, said she is looking into the Colonial Fund, a Manhattan-based private hedge fund run by Brody’s son, Cary Brody. A receptionist for the Colonial Fund said its business was private and requested that any questions be submitted through the mail. A response hadn’t been received by press time.
The Colonial Fund wasn’t named in the suit, and neither it nor Merrill Lynch has been accused of wrongdoing by regulators in the Platzer case.
The Platzers’ situation and the NYSE probe were first reported by the Wall Street Journal.
The arbitration case, filed April 12 with the NYSE, claims Brody dropped the names of Britain’s Prince Charles and his companion, Camilla Parker-Bowles, in an attempt to convince the Platzers of the strength of Global Crossing investments. Brody “recounted how she telephoned Camilla Parker-Bowles in order to sell the stock and how Ms. Bowles owned the stock,” according to the filing. “Brody … further implied that stocks had to be solid in order to be held by the entourage to Britain’s royal family.”
Amanda Foster, a spokeswoman for the Royal Family, was unaware of the prince’s ties to Winnick, adding that Charles’ name is associated with “very many” charities. As for Parker-Bowles’ Global Crossing holdings, she said, “Her private investments would be very much private.”
The claim says Brody didn’t stop at invoking the name of the Prince of Wales.
“Brody often spoke about the personal relationships that her brother had with various U.S. senators, and … the President of the United States,” the suit says. “She implied that her brother’s generous donations and influence with politicians would help to make the Global Crossing companies very profitable.”
The suit claims Brody entered “blatantly false” information on option trading authorization forms for several of the Plazters’ accounts; traded the accounts excessively; and recommended and executed “a number of transactions in which her own interests, and those of her family, directly conflicted with” Platzer’s.
The latter refers specifically to Brody’s relationship to Winnick and Global Crossing, which is the subject of two federal probes and many shareholder lawsuits charging it misled investors.
Calling Platzer’s allegations untrue, a spokesman for Winnick said, “An investigation of Ms. Platzer would show that she was an active and frequent speculator in the financial markets, and that perhaps now she and her attorneys are trying to squeeze whatever financial gain they can from Global Crossing’s present situation.”
