Judge Allows Widow's $8 Million FINRA Arbitration Claim Against JPMorgan to Proceed
From the desk of Jim Eccleston at Eccleston Law
JPMorgan Chase & Co. failed in its effort to block an 85-year-old widow from pursuing claims in FINRA arbitration over allegations that the bank failed to prevent her son from siphoning more than $8 million from her accounts.
Susan Kraus filed her FINRA claim in October against JPMorgan and several other financial institutions, asserting that they failed to protect her assets after her husband’s death in 2017. According to AdvisorHub, Kraus alleges her son, Brett Graham, systematically drained her accounts under false pretenses.
JPMorgan sought to stop the arbitration by filing suit in federal court in New York. The bank argued that Kraus was never a customer of JPMorgan Securities, since her dispute involves checking and savings accounts, not brokerage accounts under FINRA jurisdiction. JPMorgan claimed her allegations should instead be heard in court or before a non-FINRA arbitration panel.
U.S. District Judge Jesse Furman rejected that argument on Monday, ruling that the arbitrators—not the court—must determine jurisdiction. Furman noted that JPMorgan had already submitted the issue to FINRA and lost. As reported by AdvisorHub, JPMorgan cannot now ask the court to intervene.
“Having made that choice (not to mention, having already submitted the question to the FINRA arbitrators and lost), JPMorgan may not now obtain relief from a court,” Furman wrote.
The case highlights the broader scrutiny facing Wall Street firms over their responsibilities to elderly clients, particularly as aging investors face heightened risks of exploitation. Kraus’ attorney, Jenice Malecki, stated: “Money laundering and wire fraud happen at financial institutions, and we have alleged these financial institutions either do not have appropriate policies in place or didn’t follow them to protect a senior in need.”
Separately, Graham pleaded guilty in Miami to wire fraud in May for defrauding his mother of approximately $8.4 million. Prosecutors alleged he began transferring money from her accounts in 2019, misrepresenting to her financial adviser that he was making investments and covering medical expenses. Instead, he used the funds for personal purchases, including art and jewelry. He faces up to 20 years in prison at his sentencing, scheduled for September. According to AdvisorHub, Kraus has also filed a civil suit against Graham in California state court.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra, jp morgan
