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Stephenson v. Paine Webber Jackson & Curtis, Inc.

United States Court of Appeals for the Fifth Circuit
839 F.2d 1095 (1988)


Monroe Stephenson (plaintiff), an experienced investor, opened an account with Paine Webber Jackson & Curtis, Inc. (defendant) in 1979. During this time, Paine Webber’s employee, James Welch, handled Stephenson’s account. In October 1982, Stephenson learned that he owed $4,000 for a trade executed on his behalf. Stephenson informed Welch that this trade was not authorized, and Welch promised to correct the mistake. In December 1982, Stephenson received an account statement from Paine Webber for an account that he did not open. Had he done so, he would have realized that the mistake had not been corrected. Several more unauthorized trades occurred over the following months. Stephenson informed Welch of these mistakes, but never made them known to Paine Webber. Paine Webber was not informed about any of the unauthorized trades until September 1983. Stephenson then brought a suit against Paine Webber and Welch in connection with the trades. The district court ruled in favor of Paine Webber. Stephenson appealed to the Fifth Circuit Court of Appeals.

Rule of Law


Holding and Reasoning (Jones, J.)

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