Cambridge Legacy Securities Loses $1.5 Million FINRA Limited Partnership Arbitration

April 3, 2012

Flush this FINRA Arbitration Decision down the toilet -- that's about all it's good for

In a Financial Industry Regulatory Authority ("FINRA") ArbitrationStatement of Claim filed in July 2011 and thereafter amended, Claimant Blum sought to recover $500,000 in compensatory damages plus interest, punitive damages, fees and expenses arising from recommendations and sales to him of allegedly unsuitable limited partnerships.  In the Matter of the FINRA Arbitration Between Marvin J. Blum,Claimant, v. Cambridge Legacy Securities, LLC, Respondent (FINRA Arbitration 11-01875, March 30, 2012).

Respondent Cambridge generally denied the allegations and asserted affirmative defenses.

The FINRA Arbitration Panel found Respondent, liable and ordered it to pay to Claimant Blum:

  • $444,796.38 in compensatory damages plus 6% per annum interest from June 3, 2009 until paid;
  • $900,000.00 in punitive damages;
  • $12,000.00 in costs; and
  • $150,000.00 in attorneys' fees

Bill Singer's Comment:

No, puhleaaaaase - don't get me started.

Claimant asks for about $500,000 in compensatory damages plus whatever else the FINRA arbitrators think is appropriate. The case ends with a whopping award of $900,000 in punitive damages with another $150,000 in attorneys' fee - that's over a million bucks in one helluva slap in the face of the Respondent, and that's on top of over $400,000 in compensatory damages.

Why? What did the Respondent do or not do?

Oh, hey, who the hell are we to ask for such details and why should a FINRA arbitration panel bother letting us know.  Maybe, just maybe, some other customer of some other firm might be getting pressed to invest in some other limited partnership and, gee, maybe that customer would learn something about what to look for and what to avoid if this Decision bothered to provide just a tad of meaningful facts and rationale.

Once again, the world of limited partnerships has reared its ugly head. Except, this time, we're not dealing with the likes of Goldman Sachs, nor are we pointing fingers at a Wells Fargo, JP Morgan, Morgan Stanley, or even Merrill Lynch.  The Respondent in this arbitration doesn't fall into the category of those behemoths but, nonetheless, has had its own share of regulatory problems. See, for example:

Yeah, I know.  I should just calm down. Not get upset about this crap.  On the other hand, the investor here seems to have lost nearly half a million bucks in the LP. That's not chicken feed and someone at FINRA really ought to insist on something more from the arbitrators that are paid to hear these cases than name, rank, and serial number. No, I'm not blaming the three arbitrators who heard this case, raised their hand to vote on the decision, and submitted the drafted document to FINRA for publication.  I am, pointedly, blaming FINRA for such dubious quality control.