The line in the song goes: Stop in the name of love before you break my heart. Apparently that refrain became the basis for a customer arbitration. Did Edward Jones fail to properly use stop orders and break the claimants' account?
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2012, Claimants alleged that Respondent Edward Jones failed to train its advisors on the use of "stop" loss orders, which resulted in account losses of $45,831.32, the amount sought as damages. In the Matter of the FINRA Arbitration Between Melvin J. Schiebel Trust and Melvin J. Schiebel, Claimants, vs. Mark Douglas Bachman; Michael Keith Butterfield; Edward Jones; Edmond R. Lynch; and Ronald Thane Thalman, Respondents(FINRA Arbitration 12-02448, May 20, 2013).
Respondents generally denied the allegations, asserted various affirmative defenses; and requested the expungement of the matter from the Central Registration Depository records ("CRD") of respondents Lynch, Butterfield, Thalman, and Bachman.
On December 5, 2012, respondents Lynch and Butterfield submitted a Motion for Dismissal and request for expungement, to which Claimants did not submit a response opposing the motion and attended the scheduled hearing without opposing the requested expungement.
The arbitrator found that the claims asserted against respondent Lynch had occurred more than six-years after the occurrence/event giving rise to the claim and was, accordingly, ineligible for arbitration under FINRA Rule 12206(a). One down.
The arbitrator dismissed all claims against Respondent Butterfield based upon her finding respondent was not associated with the account, securities or conduct at issue, because he served as the broker of record only and engaged in no transactions other than transferring the account. Two down.
Per Order dated March 28, 2013, the sole FINRA Arbitrator hearing this matter granted Respondents Lynch and Butterfield's Motion to Dismiss and requests for expungement.
Settling The Rest
On April 12, 2013, the parties notified FINRA that they had settled the above-captioned matter. Although not set forth in the FINRA Arbitration Decision, other online FINRA records as of May 23, 2013, indicate that the matter was settled on April 1, 2013, for $18,000 (without any contribution from any individual respondents).
The FINRA arbitrator recommend the expungement of the individual respondents CRD. As to the expungements of respondents Bachman and Thalman, the arbitrator found that they
[D]id not provide recommendations or advice to Claimant Melvin J. Schiebel concerning the investments in his Edward Jones account that form the core of his complaint. Mr. Schiebel made his own investment decisions, and the transactions in question were not solicited by Mark Douglas Bachman and Ronald Thane Thalman.
Mark Douglas Bachman and Ronald Thane Thalman specifically advised Mr. Schiebel against Mr. Schiebel's proposal to place blanket stop loss sell orders to minimize commissions and other trading costs to Claimant even though, in doing so, their own compensation was diminished.
Mr. Schiebel acknowledged that he was uncertain as to broker duties and industry rules governing unsolicited transactions at the time he filed his Statement of Claim,although Mr. Schiebel signed multiple contemporaneous and unambiguous statements acknowledging that his investment decisions were contrary to recommendation and advice of Mark Douglas Bachman and Ronald Thane Thalman as well as Edward Jones' research opinions.
Bill Singer's Comment
I mean, seriously, how could this case not put you in mind of this classic tune?