Respondents generally denied the allegations, asserted various affirmative defenses, and requested an expungement of Respondent Hughes record.
On May 6, 2011, the Claimants notified FINRA that the parties had settled the matter but requested that the arbitration remain open for the purpose of conducting an expungement hearing. Thereafter, Claimants notified FINRA that they would not be attending the expungement hearing or otherwise respond to that process.
On May 24, 2011, the sole FINRA Arbitrator hearing this matter conducted a recorded telephonic hearing so
Respondents could present oral argument and evidence on Respondent Hughes' request for expungement.
Subject to the requirement of Notice to Members 04-16: Expungement, the FINRA Arbitrator recommended the expungement of all reference to the Binders' arbitration from Respondent Hughes' Central Registration Depository ("CRD") records.
The FINRA Arbitrator determined that none of the Claimants' claims were supported by the evidence. Further, the Arbitrator weighed the fact that the settlement was for the "nominal sum of $5,000." In a detailed and informative Decision, the Arbitrator provides ample support for her rationale.
For starters, the Arbitrator noted that the Claimants alleged that in June 2007, they had requested the Respondents transfer their investments into fixed accounts. (NOTE: I don't understand what the Decision means by a "fixed" account; perhaps "fixed-income" was intended?). In reviewing the available evidence, the Arbitrator found this allegation to be false and determined that it had been first made after the Statement of Claim was filed in June 2010.
In addressing the allegation that Claimant Mariys Binder was never contacted regarding the suitability of her investments, the Arbitrator pulls no punches when she states that this:
allegation is false. Ms. Binder filled out and signed forms indicating her investment objectives and was provided with periodic statements giving her the opportunity to change same.
Similarly, as to the allegation that Claimants had been invested in unsuitable variable annuities, the FINRA Arbitrator set forth the basis for her rejection of that allegation in exacting detail:
Claimants had some twenty five years of experience in investing in variable annuities long before becoming Respondents' clients. They were aware of the volatility and received monthly or quarterly statements showing them gains and losses, and advisements to connect or change their investment objectives. Claimants did not make changes and the investments they complain about were pursuant to their investment objectives on record.
As to the allegation that the Respondents had refused to transfer Claimants' accounts to another brokerage firm, the Arbitrator found this claim to be baseless. While there was a delay in transferring some of the Claimants' account because of the receiving brokerage firm's failure to properly fill-out the necessary documentation, the Arbitrator determined that upon receipt of the correct paperwork, the requested transfer was accomplished "immediately."
Another allegation that the FINRA Arbitrator rejected as false was that Respondents had "dropped" Claimant. Apparently, the Respondents had requested that Claimants transfer their accounts to another firm (for reasons that are not provided in the Decision) but Claimants refused to undertake those transfers. It seems that the transfers eventually took place in accordance with the terms of the Settlement Agreement.
Then there is the puzzling allegation that Respondent Hughes misrepresented his name as "Gerald" rather than "Jerry." The Arbitrator made short shrift of that.
As to the serious allegation that Respondent Hughes had churned Claimants' accounts to generate more commissions for himself, the Arbitrator noted that:
Respondent Hughes' commission for all the years he managed Claimants' accounts amounted to a small fraction of a percent per year and was not unreasonable.
Finally, as to the allegation against Respondent Edward Jones that the firm had negligently hired Respondent Hughes, the Arbitrator swiftly dismissed that charge by noting that Hughes had only a single, prior customer complaint, which had been withdrawn.
Bill Singer's Comment: As I often admonish individual brokers, just because everyone tells you that it's a waste of time to fight what you might view as a baseless customer complaint, doesn't make that advice correct. Moreover, as this case amply demonstrates, even if your firm settles with a complaining customer, you are not precluded from fighting for your good name and winning.
POSTED: Jun 16
Location: Dallas, Texas
Type: Assistant GC
Categories: Litigation, Outside Counsel Management, Securities
Global Financial Services company seeks securities litigation counsel (VP/AGC) with 5-8+ years of experience handling cases representing financial services companies for Dallas office. Competitive compensation package(salary + bonus + equity)
ATTRACTION: Leading provider of international, multi-currency execution, clearance and custody to financial companies. Six international offices. financially healthy, public company and nice boss. Compensation package that includes base, bonus and restricted stock. Matching 401(K) and other great benefits. Texas has no State income tax and an attractive COL. Nice group.
JOB: Report to Deputy General Counsel of parent company Be responsible for large caseload of matters before FINRA, NFA, CFTC, state court and federal court from onset through and including resolution either as 1st chair or by managing local counsel Work in a fast-paced environment.
5-8+ years of securities litigation experience representing financial services companies that must include top law firm experience. Must be able to handle own caseload from case onset through resolution (must have 1st chair trial experience); must be able to handle large caseload.
Must be experienced in dealing with FINRA, NFA and CFTC. Experience with SEC and other securities regulatory bodies a plus, but not required Must have experience with FINRA arbitrations Bankruptcy and creditors' rights experience a plus, but not required. Must be willing and able to handle one-off cases on a daily basis as they arise. Must be willing to relocate to Dallas, TX. US Residents Only
Resumes in Microsoft WORD document format ONLY to: firstname.lastname@example.org