SIDE BAR: Sorry but that's about all I can relate to you from the FINRA Arbitration Decision. As is too often the case, it's pretty much a teaser when it comes to the underlying facts. As best we can tell, Claimant was unhappy about its investments -- to the tune of over $400,000 of unhappiness. Sort of wish we had more to go on but that's what we get from FINRA these days in terms of arbitrations.
[T]he Panel finds, by clear and convincing evidence, that Sean Anthony Spearman, who at all times acted as a principal and representative of Ascendiant Capital Markets, LLC, and Ascendiant Capital Markets, LLC (i) committed acts of fraud and malice in their dealings with Claimant; and (ii) Sean Anthony Spearman was not truthful at the hearings and he and Ascendiant Capital Markets, LLC engaged in fraud and malice in the bad faith manner in which they defrauded Claimant and then tried to cover up that fraud by giving false testimony at the hearings. The Panel finds that Respondents' conduct is such that an award of sanctions and punitive damages should be made against them, jointly and severally, for the sake of example and to punish the Respondents for their conduct. This part of the award is based upon California Civil Code Section 3294.
SOPHISTICATED INVESTOR CLAIMS 16 OF 30 TRADES CONDUCTED BETWEEN APRIL AND SEPTEMBER 2012 IN ONE ACCOUNT WERE UNAUTHORIZED DESPITE RECEIVING CONFIRMATIONS FOR ALL TRADES AND MONTHLY STATEMENTS SHOWING ALL ACCOUNT ACTIVITY. CUSTOMER ORIGINALLY DEMANDED REIMBURSEMENT FOR LOSSES RESULTING FROM THESE TRADES. ALTHOUGH DOZENS OF EMAILS AND PHONE CALLS WERE EXCHANGED WITH CUSTOMER DURING THIS PERIOD THERE WAS NO MENTION OF UNAUTHORIZED TRADING OR ANY IMPROPRIETY UNTIL RECEIVING WRITTEN COMPLAINT IN NOVEMBER 2012 FOLLOWED BY AN ARBITRATION FILING IN DECEMBER 2012.
SPEARMAN (AND THE FIRM) FILED ANSWER TO THE ARBITRATION STATEMENT OF CLAIM AND DENY ALL ALLEGATIONS OF UNAUTHORIZED TRADES. CUSTOMER WAS IN CONSTANT CONTACT WITH SPEARMAN AND OTHERS AT THE FIRM WITHOUT MENTIONING ANY IMPROPRIETY UNTIL UP TO 6 MONTHS AFTER ALLEGED UNAUTHORIZED TRADES OCCURRED. CUSTOMER HAD PREVIOUSLY DEMANDED REIMBURSEMENT OF LOSSES ON THE TRANSACTIONS ALLEGED TO BE UNAUTHORIZED. ALL OTHER TRANSACTIONS IN THE ACCOUNT (WITH ONE EXCEPTION) WHICH THE CUSTOMER ACCEPTED AS ‘AUTHORIZED' WERE PROFITABLE.