Local News in Brief : City Sues Brokerage Firm
Bellflower has filed suit against E. F. Hutton to recover more than $200,000 that city officials say was lost in last October’s stock market crash because the brokerage firm improperly invested city funds.
The federal court suit alleges that the investment firm “negligently advised and directed Bellflower in its investment decisions.”
Bellflower officials say a former account representative with E. F. Hutton’s Universal City office made an unauthorized purchase of government bonds on margin, or with borrowed money, apparently violating state law and the city’s own investment policy.
The city actually lost $290,000, but last month E. F. Hutton returned the $77,712 it had collected in commissions. Hutton spokesman Robert Sharkey described the payment as a “good faith effort.” The suit seeks the remainder of the loss, $214,141 plus interest.
Sharkey denied any wrongdoing on Hutton’s part and blamed the losses on “the unprecedented drop in the bond market” throughout 1987.
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