With respect to the underlying settlement agreement, Claimant filed an Affidavit stating the following:
The Arbitrator noted that Claimant did not contribute to the settlement amount, and Claimant testified that the settlement was not conditioned on the underlying customer not opposing the request for expungement"On April 1, 2019, Claimant's counsel requested any relevant information, including the settlement agreement, for the customer from Respondent Ameriprise Advisor Services, Inc., but Respondent was unable to provide any responsive documentation. Claimant did not contribute to the settlement and Claimant does not have a copy of the settlement agreement. As such, Claimant's counsel has exhausted all avenues from which to obtain the settlement agreement"
Bill Singer's CommentBy way of background, although the customer in the underlying arbitration was the wife (in her individual capacity and as Trustee of the trust account at issue), she and her husband signed the account application and a trading authorization granting the husband trading authority over the account. Claimant testified that the husband was the only person he met or dealt with throughout the life of the account. Claimant referenced only the masculine pronoun "he" throughout his testimony. Claimant said he never met or spoke with the wife.In or about 1993 -1995, Claimant was a Junior Advisor with limited authority at OLDE Discount Corporation. The firm did not accept, nor was Claimant authorized, to handle any discretionary accounts. Claimant was paid commissions only when he sold from a limited list of OLDE Discount Corporation researched and approved investments. Claimant could not and did not receive any commissions or compensation for the transactions, which were the subject of the customer complaint; to wit: unsolicited covered calls, which were selected by the customer's husband.Claimant had previously never written a covered call until the customer's husband specifically directed him to do so on the customer's behalf. The customer's husband had prior experience in writing covered calls and expressed to Claimant that he felt the covered calls were subject to less risk than purchasing the underlying stocks outright. In order to write covered calls, the customer's husband was required to sign option paperwork, including an Option Risk Disclosure Statement prepared by OLDE Discount Corporation, which required the customer's husband to confirm his understanding and acceptance of the risks associated with options trading.The customer's husband was a sophisticated investor with 40 years of investment experience. The account at OLDE Discount Corporation represented approximately 25% of the customer's investments. Claimant dealt only with the customer's husband for the life of the account. Neither the customer nor her husband complained to Claimant or to anyone else at OLDE Discount Corporation while the account was open.Approximately one month after the account was transferred out of OLDE Discount Corporation, the wife filed an arbitration with NASD. Claimant testified that after the case was filed, the husband telephoned Claimant and told Claimant that he had nothing to do with filing the arbitration.OLDE Discount Corporation settled the arbitration for a fraction of the amount requested. Claimant did not contribute any funds to the settlement and was not directly involved in the settlement negotiations.The customer was served on September 4, 2019 with a copy of the Statement of Claim and Notice of Expungement in this case. The customer did not file anything with FINRA in response.Claimant's testimony was credible and thorough. On the basis of his testimony and expungement hearing exhibits filed on October 1, 2019, the Arbitrator finds that the customer's claim, allegation or information is false, and factually impossible or clearly erroneous.
All in all, the PIABA Report makes a number of fair and compelling points that must be addressed. Similarly, the four bullet-points of recommendations noted above present relatively reasonable first-steps towards fixing the broker expungement system. That being said, PIABA, by definition was the Public Investor ARBITRATION Bar Association but now seems to be the Public Investor ADVOCATE Bar Association -- as a long-time opponent of Wall Street's mandatory public-customer and associated-person arbitration process, I found myself viewing PIABA as fostering an unfair, biased, and conflicted system of mandatory arbitration. With the organization's apparent rebranding, much of my ambivalence attendant to its self-professed mission has dissipated. Accordingly, I applaud PIABA's efforts to initiate long overdue reforms to mandatory arbitration of all stripes; and, as such, I also hope to see a similar report prepared by advocates for the beleaguered associated person community.Finally, this is merely a situation where the chickens have come home to roost. For too long, FINRA, the self-styled Wall Street self-regulatory-organization, has adamantly and obstinately disenfranchised such critical marketplace stakeholders as the very public customers represented by PIABA and the hundreds of thousands of associated persons who work at the regulator's member firms. See, for example, "Bill Singer Submits Rare FINRA Comment" (BrokeAndBroker.com Blog / June 1, 2017)" http://www.brokeandbroker.com/3487/finra-comment-singer/