(The following story by Dan Margolies appeared on the Kansas City Star website on June 26.)
KANSAS CITY — An arbitration panel ordered a St. Petersburg, Fla., broker/dealer to pay $2.2 million to four former Kansas City Southern railroad workers after finding it had defrauded them.
The panel awarded $1.73 million in compensatory damages and $500,000 in punitive damages to Delbert W. Bair of Pittsburg, Kan., Frank Bair of Lee’s Summit, Larry L. May of Belton and Sammie L. McCain of Blue Springs.
The award was directed against InterSecurities Inc., a broker/dealer and registered investment adviser, and two of its representatives, Gregory James Hildebrand and Peter E. Dahlstrom of New Orleans.
The four claimants, who had opened IRA rollover accounts at the firm, alleged InterSecurities placed excessive amounts of their retirement assets in high-cost, high-fee variable annuities from an affiliate, Western Reserve Life Insurance Co.
The four said the accounts were 90 percent invested in equities, which they said were unsuitable for their investment objectives, and produced almost no investment income.