The city of Kanab has filed suit against two major financial institutions, accusing them of negligence and misrepresentation in the loss of more than $167,000 in city investments.
The U.S. District Court suit names as defendants Zions First National Bank, Salt Lake City; Paine Webber Inc., a Delaware company doing business in Utah; Mark Edminster, an employee of Zions; and Don Bunnell, an employee of Paine Webber.The suit says that in February 1987 Kanab authorized the sale of $3.5 million of city revenue bonds, the proceeds of which were to finance acquisition of a municipal electric system.
The next month, Zions became the trustee and Edminster was assigned by the bank to manage the trust, it says. The mayor of the city contacted Bunnell at Zions' recommendation and asked for advice about short-term investments of the proceeds, the suit says.
Bunnell, a stockbroker at Paine Webber, recommended that the money should go into MetLife State Street Government Income Fund and a Paine Webber fund and said the funds were safe, highly liquid and guaranteed by the federal government, according to the suit.
"Bunnell did not explain that the value of the investment in the funds could fluctuate up and down according to market conditions," the suit says.