RBC Capital Markets Hit with Breach of Contract Class Action

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Investors have filed a class action lawsuit against RBC Capital Markets over heavily financial losses allegedly caused by the sale of the defendant’s Reverse Convertible Note (RCN) offerings. According to the suit, the defendant’s suggestions for class members to invest in the RCN’s violated specific written instructions regarding restrictions on options trading. This conduct, plaintiffs argue, resulted in substantial financial losses for investors while the defendants reaped “staggering financial rewards” from trading outside the contractually established limited of investors’ accounts.

The complaint describes RCNs as “inordinately risky” and beyond the understanding of most of the American investing public. When each class member opened a brokerage account with the defendant, the lawsuit claims, they gave RBC Capital Markets explicit instructions about buying or selling put options—options to sell assets at an agreed-upon price on or before a certain date—in their accounts. These account holders did not, however, give authorization to the defendant to sell put options, which the case explains are “the foundational make-up of RCNs.” The defendant allegedly executed trades in these investments without authorization in violation of class members’ Financial Industry Regulatory Authority (FINRA) rights.

The proposed class covers anyone to whom RBC Capital Markets sold Reverse Convertible Notes from January 1, 2008 to the present whose written instructions did not allow for selling put options.