Nearly three decades ago, a 29-year-old attorney from Columbus, Ohio accepted a case three other lawyers had already refused. His client was a retiree from Marion County who had been wronged by his stockbroker at Prudential Securities, Inc. No legal pedigree, no institutional backing, and no guarantee of success stood behind the decision. What stood behind it was a belief that someone had to fight back.
Three years later, David Meyer stood before a small-town Ohio jury and won a verdict of $262 million against one of Wall Street’s most powerful brokerage firms, the largest civil jury verdict in Ohio history at the time. That result did not just end a case. It launched the firm now known as Meyer Wilson Werning and established the mission it has pursued ever since.
As this case approaches its 30th anniversary, it is worth examining what happened to approximately 300 Marion County retirees, what the evidence showed at trial, and why the outcome remains a defining moment in investor protection law.
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What Happened to Approximately 300 Retirees in October 1998
In the fall of 1998, the investors who brought this case were ordinary retirees. They held non-discretionary securities accounts at Prudential Securities, meaning the written agreements governing their accounts required them to make their own investment decisions. Jeffrey Pickett, who served as a Senior Vice President Retirement Planning Consultant at PSI’s Marion, Ohio office, was the broker assigned to service those accounts.
On October 7 and 8, 1998, Pickett unilaterally liquidated his clients’ accounts and moved the proceeds into the Invesco Total Return Fund and a United States Treasury money market fund. He had not asked for authorization. His clients had not given it. He acted on his own belief that the stock market was heading for a severe decline and that moving clients into conservative instruments would protect them.
It did not protect them. The stock market did not collapse. In the weeks that followed those unauthorized trades, it surged. The same clients who had been moved to the sidelines without consent watched a market recovery pass them by. According to the court record, PSI’s own market analyst internally declared the bear market over on October 21, 1998, just two weeks after Pickett’s trades.
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Why Prudential Securities’ Response Compounded the Harm
The unauthorized trades were serious enough on their own. What followed made the situation significantly worse for investors.
PSI was aware of what Pickett had done within days of the trades. The firm terminated Pickett in February 1999, following an internal investigation that had begun in October 1998. But in the months between the unauthorized transactions and that termination, the evidence at trial showed a pattern of concealment that the jury ultimately found amounted to malice.
PSI directed its employees never to describe the transactions as “unauthorized.” Clients received confirmation slips and monthly statements, but they were not told that the trades had been made without their authorization. More critically, clients were never informed that Prudential Securities was prepared to reverse the trades at the firm’s own expense, at an estimated cost of $3.5 million, and that they had the right to demand that reversal at no cost to themselves.
Instead, PSI sponsored a seminar at the Marion County Club on November 12, 1998, where Pickett explained his market outlook and gave clients the same bearish view of the economy that had motivated the trades in the first place, reinforcing the impression that staying in conservative investments was the right course. PSI’s own internal analyst had already told the firm the opposite.
This conduct, the court record reflects, was not passive negligence. The jury would later find, by clear and convincing evidence, that PSI acted with malice toward the plaintiff class in breaching its fiduciary duty and in its negligent supervision of Pickett and other employees.
How David Meyer Built the Case Against Prudential
David Meyer filed the class action complaint on September 10, 1999 in the Marion County Court of Common Pleas. He was 29 years old. The case, captioned Burns v. Prudential Securities, Inc., immediately encountered resistance from PSI and Pickett, who moved to remove it to federal court twice over the course of the litigation, each time unsuccessfully.
The road to trial was long. PSI opposed class certification, lost that fight on February 5, 2001, and appealed that ruling. The appellate court affirmed. Discovery was extensive. Motions practice was contentious. By the time trial was ready to begin, nearly four years had passed since the complaint was filed.
On July 8, 2002, the trial court granted plaintiffs’ motion for partial summary judgment, finding both Pickett and PSI liable for breach of contract, conversion, and breach of fiduciary duty, and establishing PSI’s vicarious liability for Pickett’s conduct. The remaining issues, including negligent supervision and the full calculation of damages, proceeded to trial.
Jury selection in Burns v. Prudential Securities began on September 11, 2002.
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What the Jury Decided and Why the Verdict Stood
The jury returned its verdict on October 11, 2002. It found in favor of the plaintiff class on all remaining claims and awarded:
- Compensatory damages of $11,740,994
- Punitive damages of $250,000,000
The combined verdict of approximately $262 million was the largest civil jury verdict in Ohio history at the time. David Meyer was 32 years old.
The punitive damages award reflected the jury’s conclusion that PSI’s conduct demonstrated a conscious disregard for the rights of the investors it was supposed to serve. By keeping clients uninformed, actively suppressing use of the word “unauthorized,” and denying them the opportunity to make a free, informed decision about reversing the trades, PSI had not merely made a mistake. It had, the jury found, acted with malice.
On April 21, 2003, the trial court entered final judgment against PSI in the amount of $269,194,702.43, which incorporated prejudgment interest, and against Jeffrey Pickett in the amount of $16,359,277.62. The trial court subsequently denied PSI’s motion for a new trial, judgment notwithstanding the verdict, and remittitur on July 24, 2003.
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What Happened on Appeal and How the Case Concluded
Prudential Securities appealed to the Ohio Third Appellate District. On July 11, 2006, the Court of Appeals issued its ruling. The appellate court affirmed liability in full. Pickett’s appeal was denied entirely. PSI’s challenge to the underlying verdict failed on every substantive ground.
The Court of Appeals did, however, reduce the punitive damages award. Applying the three-part constitutional framework for reviewing punitive awards, the court found that the $250 million figure, while reflective of genuine malice, was grossly excessive relative to the compensatory award in what the court categorized as an economic harm case. The court determined that twice the amount PSI had sought to avoid, twice the $3.5 million cost of reversing the unauthorized trades, was the appropriate measure of punishment. The punitive damages award was reduced to $6,851,186.
On August 15, 2006, the court entered an amended final judgment. The plaintiff class was awarded a total of $32,083,030.07, consisting of compensatory damages, annuity damages, prejudgment interest, fees, and expenses of $19,403,638.57; punitive damages of $6,851,186; and post-judgment interest of $5,828,205.50. PSI was ordered to pay in full by August 17, 2006.
On September 5, 2006, a Notice of Satisfaction was filed. Prudential paid.
Why This Case Still Matters for Investors Nearly Three Decades Later
The facts of Burns v. Prudential Securities are not a relic. Investors today face many of the same risks that confronted the retirees of Marion County in 1998, including brokers who act without authorization, firms that suppress information when it is inconvenient, and institutions that calculate what it will cost to make their misconduct go away and bet that the number is lower than the cost of accountability.
David Meyer built Meyer Wilson Werning on the foundation that calculation is wrong. Since that founding verdict, the firm has recovered over $350 million for more than 1,000 clients nationwide. It has gone toe-to-toe with Wall Street’s most powerful institutional defense teams and established a track record of results that speaks for itself.
In 2023, David extended the firm’s mission beyond the courtroom with The Investor Protector, an Amazon Number 1 Bestseller that equips everyday investors with the tools to recognize and respond to financial advisor misconduct before they lose everything. The work that began in Marion County, Ohio has always been about more than any single verdict. It has been about ensuring that ordinary investors know they have someone in their corner.
If you or someone you know has suffered investment losses due to broker misconduct, unauthorized trading, or brokerage firm negligence, Meyer Wilson Werning is ready to help. All cases are handled on a contingency fee basis, meaning clients pay nothing unless the firm recovers money on their behalf.
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Frequently Asked Questions
What were the main legal claims in Burns v. Prudential Securities?
The plaintiff class brought claims for breach of contract, conversion, breach of fiduciary duty, and negligent supervision. The trial court granted summary judgment on breach of contract, conversion, and breach of fiduciary duty before trial, establishing liability on those counts. The remaining claims, including negligent supervision and the full damages calculation, were decided by the jury.
Why were punitive damages awarded against Prudential Securities?
The jury found by clear and convincing evidence that Prudential Securities acted with actual malice in breaching its fiduciary duty and in its negligent supervision of broker Jeffrey Pickett. Key evidence included the firm’s directive to employees to never describe the trades as “unauthorized,” its failure to tell clients they could demand free reversal at PSI’s expense, and its sponsorship of a seminar that reinforced a bearish market view while PSI’s own analyst had internally declared the bear market over.
Why were the punitive damages reduced on appeal?
The Ohio Court of Appeals affirmed that punitive damages were appropriate but found the $250 million jury award to be grossly excessive under the constitutional framework governing punitive damage review. The court reduced the award to $6,851,186, using twice the amount PSI had sought to avoid paying, the estimated $3.5 million cost to reverse the unauthorized trades, as the appropriate measure of punishment and deterrence.
What does unauthorized trading mean for investors today?
Unauthorized trading occurs when a broker buys or sells securities in a client’s account without the client’s prior knowledge or consent. It is a violation of the broker’s core duty to execute transactions only as directed. Investors who discover unauthorized trades may have legal claims for breach of contract, breach of fiduciary duty, and related misconduct, and may be entitled to recover losses caused by those trades. An experienced investor protection attorney can evaluate the specific facts and advise on available options.
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