Hubby Dips Into Wife's Retirement Account And She Successfully Sues Brokerage Firm

May 21, 2012


Not all marriages end up happily forever after

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2011, Claimant Harrington asserted breach of fiduciary duty and negligence in connection with Respondent's alleged conduct in allowing Claimant's husband Mark Wallace to make numerous unauthorized withdrawals from her account that substantially reduced the value of her retirement account. Claimant sought $65,351.93 in compensatory damages plus interest, attorneys' fees and costs. In the Matter of the FINRA Arbitration Between Susan Wallace n/k/a Susan Harrington, Claimant, vs. BDF Investments n/k/a Broker Dealer Financial Services Corp., Respondent (FINRA Arbitration 11-02249, May 16, 2012).

Respondent generally denied the allegations and asserted various affirmative defenses.


At the hearing, Respondent presented a Motion to Exclude Testimony of Claimant, as her name did not appear on the witness list. Claimant opposed the Motion and after consideration of the parties' arguments, the Arbitrator denied the motion.


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

  • $65,411.93 in compensatory damages;
  • $31,231.26 in interest calculated at the rate of 5% per annum from and including April 29,2004 through and including April 29, 2012; and
  • $225.00 in costs as reimbursement for the nonrefundable portion of the filing fee.

Bill Singer's Comment

So, lemme put it this way: I have no idea, whatsoever, about any of the facts of this case beyond what I wrote above.  Notwithstanding such blissful ignorance, I've got to assume that there was pretty good evidence that the hubby sort of helped himself to a bit of the wife's savings, and that the withdrawals were not exactly by the old book.  Assuming that you have some sense that you're likely going down in flames, I'm not sure that I would have sought to preclude the wife from testifying. Then again, maybe if I knew more about the case, I'd have a different opinion.

As I would likely practice, it's hard to imagine most FINRA arbitrators being such sticklers as to preclude the sole claimant from testifying because her name was not submitted on a formal witness list.  Should it have been so disclosed? Yeah. Is that omission so outrageous as to constitute a material violation of FINRA's arbitration rules? Waddya think - as if, what, someone hearing this case is really going to dismiss it after deciding the matter without allowing the wife's testimony?

If you have a no-win case (or one where the facts are overwhelmingly unsympathetic for your side), it's not necessarily a great tactical move to take up time with motions unlikely to prevail. I mean, you know, it's gonna be quite the uphill battle to argue that you've been sandbagged by the Claimant wife's attempt to offer her testimony.  Sometimes there are technicalities and then there's the cold, harsh reality of life and how things get done. If you press an arbitrator to preclude the testimony of a sole Claimant because her name isn't on a formal witness list, you run the risk of engendering more sympathy for the likely winner, which can translate into a larger award or additional piddling costs and expenses. Still, like I said, I have no idea what the hell went on in the underlying dispute or during the progress of this arbitration, so perhaps the facts would support the legal maneuvering here.