May 15 (Reuters) - Goldman Sachs & Co must pay more than $2.5 million to an investor who alleged the firm recommended an unsuitable investment in a private equity fund, a securities arbitration panel has ruled.
The investor, Tracy Landow, filed the case against Goldman Sachs, a unit of Goldman Sachs Group Inc, and her broker in 2011, according to a Financial Industry Regulatory Authority arbitration panel ruling. Landow also alleged the firm made unauthorized trades in her account, among other things.
A FINRA arbitration panel found Goldman, but not the broker, liable and ordered the firm to pay Landow $1.6 million and roughly $1 million in interest, and other fees, according to a ruling. The facts surrounding the case are unclear. The FINRA panel, as is customary, did not include reasons for its decisions.
A Goldman Sachs spokeswoman declined comment. The firm initially asked for Landow’s case to be dismissed, according to the ruling. Arbitrators, however, granted Goldman’s request to erase, or expunge, any disclosures about the case from the broker’s record.
The case stems from Landow’s investment in the Goldman Sachs Special Opportunities Fund 2006. Landow requested that Goldman rescind the $2.3 million investment and pay her expert fees, according to the FINRA panel ruling dated May 9.
One of the three arbitrators who heard the case disagreed, in part with the ruling because she believed the investment was suitable, according to a written statement the arbitrator provided in the award.
Dissents by arbitrators can sometimes give the losing party fodder for trying to reverse rulings against them in court, say lawyers. Arbitration rulings are typically binding. But courts can overturn arbitration awards in rare instances, such as when arbitrators exceed their authority.
A lawyer for Landow did not immediately return a call requesting comment.