October 16, 2013
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2012, public customer Claimant Wu alleged unsuitability, switching, breach of fiduciary duty, and failure to supervise. At the close of the hearing, Claimant Wu requested out-of-pocket damages in the amount of $164,444.00 in "out-of-pocket" damages, $85,000 in "well managed portfolio" damages, interest, attorneys' fees, expenses, costs, and reimbursement of all FINRA fees. In the Matter of the FINRA Arbitration Between Kathleen Wu, Claimant, vs. Oppenheimer & Co., Inc. and [registered representatives name redacted by BrokeAndBroker], Respondents (FINRA Arbitration 12-00626, October 4, 2013).
Respondents generally denied the allegations and asserted various affirmative defenses.
The FINRA Arbitration Panel found
Respondent Oppenheimer liable and ordered the firm to pay to Claimant Wu;
- $166,279.00 in compensatory damages
- $27,225.00 in interest
- $21,678.98 in costs and expenses;
- $140,000.00 in attorneys' fees; and
- $300 filing fee reimbursement.
Respondent representative liable and ordered him to pay to Claimant Wu:
- $82,965.00 in compensatory damages; and
- $13,612.00 in interest
Bill Singer's Comment
Admittedly there ain't much meat on these bones. The FINRA Decision just told us enough to understand the essence of the dispute but we are pretty much left adrift on an ocean of inferences, implications, and supposition. Frankly, not the way that I like my arbitration decisions but it is certainly in keeping with FINRA's apparent policy of providing less rather than more by way of facts and rationale.
If you add up the seven financial awards in this arbitration, you arrive at a grand total of $452,059.98 -- a nice payday for Claimant. Frankly, it's about every penny in damages sought against the respondents, which makes you wonder just what the hell the respondents were thinking in fighting this case to verdict and why a settlement wasn't reached. Alas, that is often a question ever in search of an answer. More often than not, you ask the Claimant for an explanation and the answer is that the Respondent's settlement offers were insulting and never came close to serious; you ask the same of Respondent, and you are told that Claimant refused to take less than 100% and there was no incentive to settle -- might as well just enjoy the delay and inevitable loss.
If you ask most veteran lawyers -- or if you just ask me -- you're apt to learn that we tend to view most trials and hearings as failures. Nearly everything in life is amenable to compromise, and in litigation that means settlement. When you can't reach an amicable resolution short of getting into the ring and bangin' it out, it usually means that reason has failed and the dubious assertion of "principle" has won out. Which generally proves the maxim that when it comes to lawsuits "Principle comes with interest." But don't be too quick to judge: Keep in mind that those idiots in Congress are engaged in a classic duel of so-called principle for which we will all be paying one hell of a lot of interest when the markets crash and our retirement accounts implode.
Like I said, why cases fail is often a mystery and this FINRA arbitration is no exception. On the other hand, it does serve as a warning for industry respondents that sometimes FINRA arbitration panels will, indeed, ring up the register on you. In this case there were some four-hundred-fifty-two thousand reasons to try and come to an amicable agreement before leaving the outcome in the hand of three arbitrators. Claimant was likely happy the case didn't settle. Respondents were likely less so.