* Brokerage firm claimed reliance on German bank in sale of auction-rate securities
* FINRA arbitration panel denied claim in its entirety
* Oppenheimer paid US Airways $30 million in 2013 to settle structured auction-rate securities case
By Jed Horowitz and Suzanne Barlyn
NEW YORK, Jan 14 (Reuters) - An arbitration panel has denied U.S. brokerage firm Oppenheimer & Co's attempt to collect more than $30 million from Deutsche Bank AG related to the sale of auction-rate securities that the bank created.
In February 2013, a Financial Industry Regulatory Authority panel ordered Oppenheimer and one of its former brokers to pay $30 million to US Airways, now part of American Airlines Group AAL.O for misrepresenting the safety of the complex instruments.
In return, Oppenheimer sought to recoup that amount plus almost $15 million in attorneys' fees and interest from Deutsche Bank's U.S. securities subsidiary, according to Allan Taffet, a partner at the New York law firm of Duval & Stachenfeld, which represents Deutsche Bank.
In May 2013, the brokerage filed a claim against Deutsche alleging misrepresentation and omission of facts about the creditworthiness of three collateralized debt obligation issues that Oppenheimer sold to the airline. It also said the bank breached "the integrity of the Dutch auction process" that determined the price of the securities.
On Tuesday, a FINRA arbitration panel denied the action by Oppenheimer but did not give a reason for their decision.
Oppenheimer has filed two smaller arbitration cases against Deutsche Bank seeking reimbursement, Taffet said.
A spokesman for Oppenheimer did not return a call seeking comment. Taffet said the arbitration panel gave serious consideration to hundreds of documents and thousands of pages of testimony in 29 hearings over eight months.
Banks and brokerage firms that structured or sold auction-rate securities to retail and sophisticated corporate investors in the days leading to the financial crisis have paid more than $60 billion in fines and reimbursement since 2009. The securities were marketed as ultra-safe, short-term investments that paid returns higher than money-market funds. But the bonds had to be resold at auctions every few weeks, and those auctions began to fail in 2008, leaving investors unable to redeem the securities.
Oppenheimer has taken a succession of auction-rate hits. It lost another FINRA arbitration in 2012 that required it to buy back nearly $6 million of auction-rate securities from a client. A February 2010 settlement with the New York Attorney General's office and the Massachusetts Securities Division required it to repurchase $31 million of the securities from other clients.
Oppenheimer held almost $95 million of repurchased auction-rate securities on its books at the end of September 2014, and has commitments to repurchase another $13.1 million as part of settlements with regulators and individual investors.
(Reporting By Jed Horowitz and Suzanne Barlyn)