June 30, 2018
There are lawsuits in which it's pretty clear that we're dealing with an innocent victim. Imagine a pedestrian simply walking down the sidewalk and he gets hit by a car, which was cut off by a cab, which was rear ended by a bus, which was swerving to avoid hitting a bicyclist, who was forced out of the bike lane by a parked ambulance handling a medical emergency. Somebody's got to pay the injured pedestrian. In a recent FINRA customer arbitration, a public customer relied upon the valuation of his bonds as posted on his brokerage firm's website. Those prices may not have been accurate. The brokerage firm argued that the customer had "options" for verifying the accuracy of the bond prices.The brokerage firm argued that it had merely reposted prices provided to it by an exchange. What's an arbitrator to do?
Sometimes facts are double-edged. They can prove or disprove a complaining customer's case -- or, they can defend or upend a stockbroker's explanations. All of which explains why a savvy lawyer, who knows what to look for and how to use it, can make all the difference in the outcome of litigation. And, yes, for the cynics among you, that would also explain why certain evidence is oddly lost, destroyed, or never produced. On the one hand. On the other hand. Slash and slash. In today's BrokeAndBroker.com Blog we consider a FINRA expungement arbitration in which an arbitrator's rationale provides us an opportunity to use and duck from the back-and-forth blade of facts as presented in litigation.
Here we go again. Marital bliss ain't all it's cracked up to be. Add one elderly wife. Add one part husband. Add two parts brokerage account for the benefit of the kids. Shake. Remove cash from the account. Pour into one big regulatory glass and garnish with a compliance nightmare.
In today's featured FINRA public customer arbitration against both UBS and Morgan Stanley, we have some curious facts and allegations. We go a mother and father and their daughter. We got the son-in-law stockbroker. We got a disputed kickboxing investment. We got some odd decisions to drop parties and not to call certain witnesses. We got allegations involving money that seems to have come and gone and come back without damage. All in all, it's a confusing case that becomes even more so after you read the arbitrators' decision.
Decades ago, Wall Street sold its soul when it embraced the so-called "financial superstore" model and integrated banking, mortgages, insurance, stocks, bonds, options, annuities, and futures under one leaky umbrella. The theory was that cross-selling would move the the old-fashioned brokerage firm onto a glitzy platform from which customers would be up-sold into a wide array of new and different financial products. In reality, that platform turned out to be little more than a plank from which many customers were prodded into walking to the end and then plummeting into the murky waters of financial ruin. Rather than protect consumers, Wall Street's regulators took on the role of cheerleaders and, at times, rigged the regulatory system so that it favored financial superstores over more local, smaller brokerage firms. The wise voices urging caution were marginalized as out-of-touch old-timers. Financial superstores may have taken control of Wall Street's Jurassic Park but they are little more than re-animated fossils of a bygone era. In the end, these financial dinosaurs cannot sustain themselves in the modern world.