Principal Securities ordered to pay $7.3M
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Principal Securities was recently ordered to pay millions of dollars in damages after allegedly mismanaging a Powerball winner's charitable account
Why it matters: The retail broker-dealer, which is an arm of the Des Moines-based Principal Financial Group, promotes itself as one of America's leading financial services organizations.
Catch up fast: Minnesota resident Paul Rosenau won a $180.1 million jackpot in 2008. It was also the fifth anniversary of the death of his granddaughter who suffered from Krabbe disease, a rare neurodegenerative illness.
- He and his wife allocated nearly $30 million of their winnings to start a charitable group for treatments and assistance to families affected by the disease, hiring an advisor at Principal Securities to manage it.
Zoom in: The Rosenaus were flown on a private plane to Principal's headquarters weeks after the win and assured by the company's senior management that the money would be safe and grow, he told the Wall Street Journal columnist Jason Zweig.
- Instead, the family alleges Principal Securities made unsuitable investments and failed to disclose fees and expenses — which the company denies, per the Journal.
By the numbers: Zweig estimates that the money could have earned between $12 million and $25 million more between 2011 and 2017, when it was pulled away from Principal.
Driving the news: An arbitration panel run by the Financial Industry Regulatory Authority last month ordered Principal to pay the family foundation just over $7.3 million in damages.
- Principal declined Axios' request for comment this week, citing pending litigation.
What's next: As of Tuesday, Principal had not filed a court motion seeking to challenge the award.