Grayson awarded $852,000 in federal securities case

Former U.S. Rep. Alan Grayson has won $852,000 in a federal securities case he claimed involved a “Ponzi scheme” that defrauded him and other investors of up to $1 billion.

The award was far smaller than the $30 million Grayson sought. He contended he lost at least that much money, including capital gains, in deals made in 2002 and 2003 with a company called Derivium Capital LLC, and involving Wachovia Securities LLC.

“We are pleased that some measure of justice has finally been achieved for our family, and that hope has been restored for all of the Derivium victims. This was a terrible event in the lives of the hundreds of unfortunate people who lost hundreds of millions of dollars in the Derivium scheme,” Grayson said in an announcement released by his lawyers at Morgan and Morgan’s The Business Trial Group.

A Democrat, Grayson was elected to Congress from Orlando in 2008, but lost a re-election bid in 2010. He’s campaigning

“We are pleased that some measure of justice has finally been achieved for our family, and that hope has been restored for all of the Derivium victims.’’

for Congress again, this time in another district that stretches from southeast Orange County through Osceola County.

Derivium Capital went out of business and filed for Chapter 11 bankruptcy in New York in 2005. Grayson filed a separate claim in that case and has won judgments but has not been able to collect.

Grayson pursued Wachovia Securities in 2007 through the U.S. Financial Industry Regulatory Authority, which arbitrates fraud claims against brokerage houses. The authority ruled April 2 that Wachovia Securities is liable for “aiding and abetting breach of fiduciary duty” and must pay Grayson $852,000.

Through a merger, Wachovia Securities is now known as Wells Fargo Advisors. A spokesman for Wells Fargo Advisors de- clined to comment.

What Derivium Capital offered, according to reports, was an investment strategy that allowed people to offer stock as collateral on loans, receiving up to 90 percent of the value of the stock, with the option to reclaim the stock later. But the company quickly sold the stock, through Wachovia Securities, even though the clients were not in default, then used the proceeds to fund more loans and pay earlier investors, said Tucker H. Byrd, lead trial counsel of The Business Trial Group.

“The music stopped, and there were no chairs left,” Byrd said.