There are times in life when you just don't get a second bite at the apple, you don't get a second chance, you don't get a second take, you don't get a do-over, and you don't get a mulligan. Some folks are perplexed by life's one-and-done moments; and, in response, they seem to wonder if that's all there is. You sure? I can't take another whack at it? In a recent FINRA customer-complaint arbitration shows, we have a Claimant who seems to think that even after the fat lady sings, it's not over. Alas, it is over. As in fully, finally, and forever.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2016, and as amended thereafter, public customer Claimant Hedberg, representing herself pro se, alleged negligence, churning, breach of fiduciary duty, misrepresentations, omission of facts, suitability, and failure to supervise. Claimant sought $650,000 in compensatory damages and $50,000 in punitive damages. In the Matter of the FINRA Arbitration Between Alice L. Hedberg, Claimant, vs. Edward Jones and Torsten Holmes, Respondents (FINRA Arbitration 16-01442, March 21, 2017).
Respondent generally denied the allegations, asserted various affirmative defenses, and sought the expungment of this matter from Respondent Holmes' Central Registration Depository records ("CRD").
Been There. Done That
Respondents submitted a Motion to Dismiss in January 2017, which Claimant opposed. After hearing oral arguments on the motion, on March 16, 2017, the FINRA Arbitration Panel granted Respondents' Motion to Dismiss pursuant to Rule 12504 of the Code of Arbitration Procedure for Customer Disputes. The Panel offered this rationale:
On or about 27 September 2012, the Claimant signed a "Settlement and Release Agreement" with the Respondents. There are no allegations that her signature is not genuine. Among other things, the Claimant testified that she had read the Settlement Agreement, and did indeed sign it.
The Settlement Agreement concluded an earlier Simplified Arbitration case, FINRA Case No. 12-02388, by and between these same parties. The Claimant received from the Respondents the sum of $2,951.25 as her consideration for entering into the Settlement Agreement.
The Settlement Agreement is unequivocal. Among other things, it provides for the "full and complete resolution of all matters" between the parties. The Claimant released the Respondents from "any and all claims" she "ever had, now have, or may hereafter have, whether known or unknown, . . . suspected or unsuspected, arising out of or in any way related to" her transactions with the Respondents.
Finally, the Settlement Agreement plainly states that it is the intention of the parties to "fully and finally forever settle and release any and all matters, disputes, and differences, known or unknown, suspected or unsuspected, which do now exist, may exist or heretofore have existed" between them.
In view of such plain and absolute language fully and forever settling and releasing any and all claims the Claimant ever may have held against the Respondents, the Motion to Dismiss must be granted, and the Panel does so.
In addition to dismissing Claimant Hedberg's claims, the FINRA Arbitration Panel denied Respondent Holmes' request for an expungement.
Bill Singer's Comment
Compliments to this FINRA Arbitration Panel for providing us with sufficient content and context to make its decision compelling and understandable. The arbitrators reiterate in commendable fashion the doctrine of finality that attaches to virtually all executed settlements. The lesson for industry parties is to always inquire as to whether you are being sued about a matter that had previously been settled. The lesson for public customers is to be careful -- very careful -- about the extent of what a settlement covers: Before you sign off on such a document, perhaps you should consult with a lawyer and make sure that you understand what you are releasing. A standard provision in most settlements and releases is that they cover anything and everything "from the beginning of time." For those unfamiliar with the concept, that period of release will pretty much cover events starting with the Big Bang. That's a loooooong time. You can limit who is released. You can limit what is released. What you can't do is sign on the dotted line of a Settlement Agreement and General Release, and, thereafter, go after parties and conduct that you released.
As of April 4, 2017, FINRA's online BrokerCheck database discloses that Respondent Holmes was first registered with in 2000 with Edward Jones.
#12-02388: the Simplified Arbitration
Under the BrokerCheck heading "Customer Dispute -- Settled," Edward Jones disclosed its August 9, 2012, receipt of FINRA Arbitration Statement of Claim12-02388 (the docket number noted as the "Simplified Arbitration" referenced in the above quote from the Hedberg v. Jones et. al FINRA Arbitration Decision). Edward Jones indicated that the alleged damages #12-02388 was $2,951.25 for an "Annuity-Variable / Unit Investment Trust" based upon allegations that:
CLAIMANT ALLEGES THAT THE JONES FA RECOMMENDED A UNITED INVESTMENT TRUST BOND WHICH WAS UNSUITABLE FOR HER AGE AND FINANCIAL SITUATION. THE CLAIMANT ALSO ALLEGES THE FA MISREPRESENTED AND FAILED TO DISCLOSE FEES ASSOCIATED WITH SURRENDERING AN ANNUITY SHE OWNED.
Edward Jones reported the matter settled for $2,951.25 on October 1, 2012, but that Holmes did not contribute to the settlement.
16-01442: Hedberg's 2016 Arbitration Claim
Under the heading "Customer Dispute - Pending," Holmes' BrokerCheck records disclose FINRA Arbitration 16-01442, which is the number assigned to Alice L. Hedberg v. Edward Jones and Torsten Holmes. Edward Jones reported that the Claimant in the "pending" arbitration was seeking $650,000 based upon allegations that:
Claimant alleges her account was churned between 2003 and 2011. Claimant also alleges the use of margin was unsuitable.