[ by Howard Haykin ] A FINRA arbitration panel issued a wealthy semi-retired real estate developer and his family $1.4 million.  E*Trade was the respondent.  Yet, the case had an interesting, if not unusual, fact pattern, and a central issue in the case was determining whether brokerage houses, such as E*Trade, are responsible for the actions of independent stockbrokers, who aren't formal employees of the brokerage. Claimants. Gerald Nash, 88, a wealthy semi-retired real estate developer, and his family - all residents of New Hampshire and Florida - filed a statement of claim seeking to recover $13 million that they claim to have lost through an unregistered securities dealer with E*Trade.  As noted above, they were awarded $1.4 million. According to the statement of claim, Mr. Nash who made his fortune from his various real estate ventures, but in particular, prospered from the Citrus County, FL, community he developed - a site which has grown to 7,100 people. Nash states that several years ago, he met Raymond James Financial stockbroker Richard Kauffman in Citrus Hills and opened a securities account with him.  When Kauffman left RJF for another brokerage house, the Nash family closed their James account and followed him to Brown & Co. E-Trade became involved when ... it purchased the second brokerage, Brown & Co.  It was during the time that the Nash's account was held at Brown & Co., that the family claims it lost millions in securities trades - for the period, late 2007 through 2008.  It was at this point in time that the global financial crisis seemed to be at its peak, and most investors lost significant holdings. However, the family filed an arbitration case against E*Trade in 2011, arguing that E*Trade had failed to investigate Kauffman's background or monitor his trades.  It turned out that Kauffman hadn't been registered or licensed in the securities industry since at least late 2003, according to the statement of claim.  The Nash family further noted that Kauffman conducted a series of "excessive" trading in their account, including the trading of stock options. Counsel for the Nash family further charged E*Trade with earning hundreds of thousands of dollars in commissions on these trades. There's no further statement about this - either to confirm or to contradict that fact. Ruling is Delivered. In May, the FINRA arbitration panel awarded the Nash family about $1.4 million.  Jeffrey Coleman, counsel for the Nash family, said he thinks the award was just a fraction of the family's actual losses of $13 million, because so many other people also lost money in the market  in 2008. E*Trade issued no statement on the ruling, other than to say that it would contest the award in court.  E*Trade had argued that Kauffman was an independent stockbroker, so the firm couldn't be held accountable for his actions. For further details, go to: [Tampa Tribune, 7/3/12].