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DEFENDANTS Professional Negligence – Alleged professional negligence by stock transfer company – Claimed failure to properly authenticate signature before transferring stock – Stock transferred on forged signature – Loss of stock value.

U.S.D.C. - Southern District of Florida

The plaintiff alleged that the defendant, a stock transfer company, failed to authenticate his signature before transferring his stock. As a result, the plaintiff alleged that his stock was sold with a forged signature and he lost some $2 million in assets. The defendant maintained that it followed appropriate procedure and had obtained a certificate that the plaintiff’s signature was genuine from the company whose stock was being transferred.

Evidence showed that a close friend of the plaintiff was also the president of a company in which the plaintiff owned stock. Unbeknownst to the plaintiff, this individual (a non-party to the litigation) forged the plaintiff’s name on the plaintiff’s stock certificate, transferred the stock without the plaintiff’s permission and converted the proceeds.

The plaintiff alleged that the defendant stock transfer company was negligent in completing the transaction without obtaining adequate assurance of the authenticity of the signature on the certificate. The plaintiff also claimed that the defendant breached its fiduciary duty to the plaintiff.

The plaintiff maintained that the defendant should have taken further action to prevent the forgery such as obtaining a signature guarantee from a bank or financial institution in which the plaintiff’s signature was on record. The defendant argued that the signature guarantee procedure it had in place was reasonable. The defendant produced evidence that it had obtained a certificate from a representative of the company, whose stock was being transferred, attesting that the signature of the stock transfer was the genuine signature of the owner of the stock.

The defendant also argued that the plaintiff was responsible for the loss because he failed to obtain possession of his stock certificate from the company for more than four years and because he knew that the forger was untrustworthy. As it turned out, the plaintiff’s signature was apparently verified by the same individual who had forged the signature in the first place; since, as the president of the company (whose stock was being transferred), he was authorized to verify signatures.The jury found for the defendant. The defendant’s motion for attorney fees is pending, based on a proposal for settlement.

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