A FINRA Arbitration Panel Found in Favor of a Customer of Deutsche Bank who Invested in the Aravali Fund

A large FINRA arbitration award was recently rendered against Deutsche Bank Securities, LLC (“Deutsche Bank”) for sales practice abuses concerning Deutsche Bank’s selling and marketing of the Aravali Fund, LP (“Aravali Fund”). The Aravali Fund was sold to investors who were seeking income and safety of principal as an alternative to a municipal bond portfolio. In reality, the Aravali Fund was a very risky interest arbitrage scheme comprised of a significant short position in treasury bonds, interest rate swaps and a highly levered pool of relatively illiquid municipal bonds. Not long after inception, the Aravali Fund plummeted in excess of 90% in value, and was liquidated. Based on these claims, our firm has filed numerous arbitrations against Deutsche Bank on behalf customers of Deutsche Bank who invested in the Aravali Fund.

The FINRA arbitration panel found Deutsche Bank liable for the investor’s losses in the Aravali Fund in the amount $803,850. Deutsche Bank was also ordered to pay the entire cost of the hearing. The FINRA award appears to represents about half of the client’s investment loss in the Aravali Fund. It also appears that this investor, like all other investors in the Aravali Fund, received, acknowledged and signed the Aravali Fund offering materials, including, the Subscription Agreement and Private Placement Memorandum, which purportedly contained risk disclosures, and was used in defense of the claims; yet the Panel appears to have awarded half the investor’s damages for his investment in the Aravali Fund.

If you suffered losses stemming from the Aravali Fund, contact Lax & Neville, LLP.