An irreverent Wall Street Blog
by Bill Singer
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

FINRA Arbitration Panel Hits Losing Customer Claimants With Sanctions
Written: July 14, 2010

In a FINRA Arbitration Statement of Claim filed in March 2009, Claimants Kenneth J. and Penelope Iwanicki alleged that Respondents Richard and Robert Lewin (the "Lewins") made misrepresentations and purposeful omissions of material facts concerning high risk stocks in Claimants’ accounts at Respondent Basic Investors, Inc.  Claimants alleged that the Respondents Lewins enaged in hundreds of unauthorized tranasactions for the sole purpose of generating commissions and advised Claimants to purchase unsuitable securities given their stated risk tolerance and financial goals.  Further, Claimants alleged that Respondent Penson served as Respondent Basic’s clearing house and, as such, had an oversight responsibility for all the cited trading.   Claimants sougth $1,300,000 in compensatory damages; $4,000,000 in punitive damages, $3,900,000 in treble damages, $750,000 in other relief, and unspecified attorneys’ fee, costs, etc. In the Matter of the Arbitration Between Kenneth J. Iwanicki and Penelope Iwanicki, Claimants, versus Richard Lewin, Robert Lewin, Basic Investors, Inc., and Penson Financial Services, Inc., Respondents. (FINRA Arbitration 09-01494, June 29, 2010)

Respondents generally denied the allegations and asserted the following defenses:

  • The Lewins did not undertake a new investment strategy that was inconsistent with the Claimants’ ojectives or capacities, and the Lewins did not act in an manner inconsistent with the Claimants’ instructions.  All of the Lewins’ recommendations to Claimants were based upon a good-faith evaluation of what, at the time, was an “historically difficult market,” and in full recognition of Claimants’ personal sitatuion.
  • Respondent Penson asserted that Claimants had failed to state a claim upon which relief can be granted; that Claimants did not suffer any damages resulting from any acts/failures to act by Penson; that the claims are barred in whole or part by comparative/contributory negligence, and that Penson acted in good faith.  Finally, Penson raised the defenses of waiver, ratification, or estoppel.


In November 2009, Respondent Penson filed a Motion to Dismiss that was to be considered at the conclusion of Claimants’ case-in-chief.

In December 2009, Penson filed a Motion for Sanctions, which the Panel denied in February 2010. 

Claimants appeared at a January 19, 2010 hearing by phone and sought a continuance, which the Panel granted.  At the hearing, the Panel denied a Motion to Dismiss by Respondents Lewins and Penson .

Around January 21, 2010, Penson filed another Motion fo Sanctions based in part on Claimants’ alleged failure to comply with the Panel’s discovery order and for failure to appear at the final hearing on January 19-22.  In its Order dated February 11, 2010, the Panel granted the Motion for Sanctions and found Claimants jointly and severally liable to Penson for $12,069.03.  The Panel further ruled that the reconvening of the final hearing would be predicated upon prior payment of that award.

Around February 1, 2010, the Respondents Lewins filed a Motion Regarding Rescheduling Hearing Conditions, which requested expense reimbursement for the postponed January 19-22 hearing dates as yet another condition precedent to reconvening the final hearing.  By Order dated March 6, 2010, the Panel found Claimants jointly and severally liable to the Lewins for $12,588.26 but denied making full payment a condition precedent to the reconvening of the hearing.  However, the Panel precluded each and every party from calling as a witness anyone not listed on that party’s December 2009 witness list, unless all parties agreed to the contrary or upon a showing of good cause, or as required by the Code of Arbitration.

At the reconvened June 14, 2010 hearing, Claimants moved to again adjourn the hearing until their expert witness was available. The Panel denied the request but permitted telephonic testimony by the expert.  At the June 15, 2010 hearing, Respondent Penson moved to bar Claimants’ expert from testingy about clearing firms, which was also denied by the Panel.

At the June 15, 2010, Claimants moved for a default against Respondetn Basic Investors, Inc., which was not represented at the hearing. The Panel denied the Motion.

At the conclusion of Claimants’ case-in-chief on June 15, 2010, the Respondents Lewins moved to dismiss.  The Panel granted the Motion.

FINRA Arbitration Panel Decision

Finally the Panel dismissed all remaining claims of Claimants and ordered them to pay the previously awarded sanctions of $13,069.03 to Penson and $12,588.26 to the Lewins.

A Personal Message from Bill Singer ---

The Financial Industry Regulatory Authority (FINRA) has just distributed its Proxy for the Annual Meeting of FINRA Firms on August 12, 2010. As to the eight propositions on the ballot, FINRA's representatives will vote "NO" on items #2 through #8 in the absence of your voting instructions. 

FINRA member firms cannot defer these critical choices to the self-regulator and its supporters.  A failure to ensure that your voice is heard -- now, this year -- is irresponsible.  Your career and your business are at stake. 

You complained about the ongoing destruction of the independent/regional community, but the agenda catered to the big boys and the too-big-too-fail.

The compensation of FINRA's top regulators rose to astronomical heights, but no one would timely return your calls when you needed help. 

You watched in shock as FINRA's cronies circled the wagons and prevented meaningful reform of an inept bureaucracy -- and you were outraged when many of those same pals were appointed to boards, panels, committees, and subcommittees.

Now is the time to say "enough."

Proposition #1

I urge you to reject those individuals nominated by FINRA's National Nominating Committee (designated "FINRA Nominee").  Please vote for the individuals listed under the "Nominee by Petition" heading:

FIRST CLASS:  Howard Spindel or Ken Norensberg (only vote for one of these two)

SECOND CLASS: Joel R. Blumenschein


PROPOSITIONS #2 through #8

I urge you to vote "YES" for each and every proposition noted below:

2. Disclosure of Compensation of FINRA’s Top Ten Most Highly Compensated Employees

3. Independent Study of Current and/or Former FINRA Officer and/or Director Involvement with the Madoff Family

4. Transparency of FINRA Investment Policies, Practices and Transactions.

5. FINRA Board of Governors Meetings Should Be Made Public Except When Absolutely Necessary.

6. “Say on Pay” for Top Five Most Highly Compensated FINRA Employees.

7. Creation and Employment of an Independent Private Sector Inspector General.

8. Disclosure of IRS Correspondence Concerning $35,000 NASD Member Payment.


Previous Entries
June 29, 2015
On June 26, 2015, the Financial Industry Regulatory Authority ("FINRA") published this somewhat unusual and intriguing press release:FINRA Supports NA... Read On
June 27, 2015
BREAKING NEWS: Supreme Court Rules On Gay MarriageIn Obergefell et al. v. Hodges, Director, Ohio Department Of Health, et. al (Slip Opinion,... Read On
June 26, 2015
In Obergefell et al. v. Hodges, Director, Ohio Department Of Health, et. al (Slip Opinion, Supreme Court, No. 14–556; 576 U. S. ____ / June ... Read On
June 26, 2015
During my three decades on Wall Street (which has included stints as an industry regulator, industry defense lawyer, and public customers' lawyer), I'... Read On
June 25, 2015
You ever heard of PPAC Act -- a Congressional Act passed in March 2010?  That law is formally known as the "Patient Protection and Affo... Read On
June 25, 2015
If there is a hallmark of the Financial Industry Regulatory Authority's ("FINRA's") approach to Wall Street regulation, it is likely found in the se... Read On
June 24, 2015
It has been said that lawyers' fees are like a gas, which expands to fill any size container. Sometimes you get what you pay for and your lawyer think... Read On
June 24, 2015
You can't do something about something that you don't know anything about. Yeah, I know, not exactly profound words but they are at the heart of today... Read On
June 23, 2015
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS: BrokeAnd... Read On
June 22, 2015
In a "National Exam Program /Risk Alert: Retirement-Targeted Industry Reviews and Examinations Initiative," (Office of Compliance Inspections and... Read On
June 22, 2015
This ain't the first blog that I have published about someone cheating during a Wall Street qualifying examination, and I think it's safe to... Read On Job Search

Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Morgan Keegan Arbitration Counterclaim Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC Ponzi Affinity Fraud Wachovia Criminal Raymond James Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX FBI Banc of America Pro Se PCAOB Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax Email Netschi Moore Whistleblower Street Sweeper Countrywide Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade AIG Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Thain Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 Eligibility RRBDlaw 8210 Appeal Fowler LPL Johnson Cellphone US Airways JPM BrokeandBroker Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Rule 3050 Away Account Credit Repair PN Advisor Placement Group Fifth Amendment Forex Mortgage Private Placement Moon CGMI Failure to Supervise Merrill Anderson Exam Lee Borrowing Tax Lien Charity Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Deferred Compensation RIA Prison Disclosure NASAA Aguilar FCPA Subway Testimony Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital Retirement Due Process God HSBC Private Placements Eric Stein Wire Fraud FINOP CCO Compliance Audit Test Examination Cheating Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Series 7 Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud OBA Equity Indexed Annuities EIA Disability MetLife Continuing Education OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS AML PST Solicited Unsolicited Congress SRO Password Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Obamacare Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Practice Sale Unfair Competition Signature Judgments Data Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Sexist NML Argentina Embezzlement Silver Investor Alert Evidence Judgment Bank Fraud Deceased Bill Singer BrokeAndBroker TSSB OHO Leveraged ETF Mary Jo White Trustee FINRA AWC Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Commissioner Stein 401(k) Rule 3040 Customer Files Class Action Beneficiary NYAG Schneiderman 11th Circuit Insurance Gallagher White Self Regulation Short Sale Compromise Website Rule 2010 Check TRO Supervision Vacatur Remand SDNY Rule 12206 BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Confidential Inside Information Reg SP VA Leveraged ETFs Regulation SP Fees Cease And Desist Customer Rule 3270 Rule 3240 Annual Compliance Questionnaire OWB 2Cir Red Flags Payroll Stockbrokers ALJ Cybercrime Loans BrokerCheck Altered Records
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+