You ever watch a fight in which it's hard to tell who the winner is? In today's BrokeAndBroker.com Blog we are asked to score a bout between a public customer and his former stockbroker. Frankly, the customer is a loser in terms of the decision. On the other hand, it's sort of tough to find a winner on the other side of the card. I'm a loser. No . . . I'm a loser.Case In PointIn a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2016, public customer Claimant Sharman asserted unsuitability; churning; unauthorized trading; breach of contract; securities fraud; fraud; failure to supervise; negligent supervision; respondeat superior; and breach of the covenant of good faith and fair dealing in connection with his investments in what the FINRA Arbitration Decision characterizes as "unspecified options and securities in various, unspecified sectors, including the energy sector." At the close of the hearing, Claimant Sharman sought $417,000 in compensatory damages and $417,000 in punitive damages plus attorneys' fees. In the Matter of the FINRA Arbitration Between Gerald Sharman, Claimant, vs. Morgan Stanley Smith Barney LLC Richard Martin Shalhoub, Respondents (FINRA Arbitration 16-02576, March 7, 2018)
Respondents requested the dismissal of all charges and the expungement of the matter from Respondent Shalhoub's Central Registration Depository records ("CRD").
No WinnersThe FINRA Arbitration Panel denied Claimant Sharman's claims and denied Shalhoub's requested expungement. In denying the requested expungement, the Panel offered in part this rationale:
Respondents' request for expungement of Shalhoub's CRD record is denied. The facts showed that Shalhoub had made some unauthorized trades. However, facts also showed that Claimant ratified the trades when told of them rather than object and take action to reverse them, and that Claimant had no damages to attribute to Shalhoub regarding the trades. Therefore, the Panel is denying the expungement request.
Bill Singer's CommentAs set forth in FINRA online BrokerCheck records as of March 14, 2018,. Shalhoub was first registered in 1998. The only "Disclosure Event" on his record is the Sharman arbitration, which was disclosed by Morgan Stanley Smith Barney as having been received as a customer complaint on November 24, 2014, and evolved into a FINRA Arbitration on September 6, 2016. BrokerCheck disclose the allegations as follows:
Claimant alleged, inter alia, unauthorized trading and misrepresentation with respect to commissions - September 2011 to December 2014.
(1) Have you ever been named as a respondent/defendant in an investment-related, consumer-initiated arbitration or civil litigation which alleged that you were involved in one or more sales practice violations and which:(a) is still pending, or;(b) resulted in an arbitration award or civil judgment against you, regardless of amount, or;(c) was settled, prior to 05/18/2009, for an amount of $10,000 or more, or;(d) was settled, on or after 05/18/2009, for an amount of $15,000 or more?
The facts showed that Shalhoub had made some unauthorized trades. However, facts also showed that Claimant ratified the trades when told of them rather than object and take action to reverse them, and that Claimant had no damages to attribute to Shalhoub regarding the trades. . .