Bill Singer Slams FINRA Ameriprise Arbitration Decision For Lack of Content and Context

January 28, 2016

An Ameriprise Financial Services customer died and the estate's executor sued the brokerage firm for $1 million in compensatory damages and $1.5 million in punitive damages. Even as jaded an industry pundit as the BrokeAndBroker Blog's author and publisher Bill Singer takes notice of a FINRA arbitration with those multiple seven-figure damages. The jaded and dyspeptic Bill Singer also notes the lack of content and context in yet another FINRA Arbitration Decision -- and he's not pulling his punches or mincing words about his disgust.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in November 2014, Claimant executor asserted conversion, fraud, breach of fiduciary duties, failure to supervise, embezzlement, misrepresentation, respondeat superior, and omission of facts. Claimant sought $1 million in compensatory damages, $1.5 million in punitive damages, plus interest, costs, and expenses. In the Matter of the FINRA Arbitration Between Harold B. Wooten, Executor of the Estate of Glenny B. White, Claimant vs. Ameriprise Financial Services, Inc.,Respondent (FINRA Arbitration 14-03531, January 19, 2016).

Respondent Ameriprise generally denied the allegations and asserted various affirmative defenses.

At the conclusion of the hearings, the FINRA Arbitrators granted Claimant's December 2015 Motion for Sanctions.

In an effort to avoid any criticism of attempting to spin the facts, the BrokeAndBroker Blog offers this unedited, full-text of the FINRA Arbitration Decision's "Award" section:


After considering the pleadings, the testimony and evidence presented at the hearing, the Panel has decided in full and final resolution of the issues submitted for determination as follows:

1. Respondent is liable for and shall pay to Claimant compensatory damages in the amount of $500,000.00.

2. Respondent is liable for and shall pay to Claimant punitive damages in the amount of $1,500,000.00. The Panel awarded punitive damages pursuant to the following case law: Mastrobuono v. Shearson Lehman Hutton, Inc. 514 U.S. 52 (1995) and Giant of Va., Inc. V. Pigg, 152 S.E.2d 271, 277 (Va. 1967) ("such recklessness or negligence as to evince a conscious disregard of the rights of others").

3. Respondent is liable for and shall pay to Claimant $36,890.00 in sanctions representing attorneys' fees incurred by Claimant as a result of Respondent's failure to cooperate, failure to produce discoverable materials, and knowing violation of the Chairperson's Order dated November 21, 2015.

4. Any and all relief not specifically addressed herein is denied.

Bill Singer's Comment

Let's see if you and I have both asked ourselves the same questions:

What the hell did Ameriprise and/or its registered persons do to the account that prompted this lawsuit?

I haven't a single clue -- do you? The Decision does little more than reiterate Claimant's causes of action. There is no specificity as to what happened, when, or why. We have an allegation of "fraud," for example, but not a shred of content as to what constituted that claim and, worse, not a scintilla of explanation as to what the FINRA arbitrators found happened here. What misconduct took place? Not a clue. What fraud transpired? Your guess is as good as mine. On what basis did the Panel even find wrongdoing? Not a single, damn word of rationale or explanation.

Why did the Panel only award $500,000 rather than the sought $1 million in compensatory damages?

To use the vernacular: We don't know jack. It may well be, as is often the case, that Claimant sought damages in excess of the actual, calculated compensatory losses but that's not something the public should be left to ponder without any guidance in the FINRA Arbitration Decision. Although within the walls of Wall Street a half-a-million-bucks may be chump change, for the rest of us, that's a considerable sum. Moreover, if Ameriprise engaged in $500,000 worth of damaging misconduct, you would sort of think that given the mandatory nature of Wall Street arbitration, FINRA would feel some obligation to inform the investing public of the transgressions of its member firms. I mean, seriously, what the hell is the point in publishing these Decisions if not to educate and warn the public?

What was the nature of the misconduct found by the FINRA Arbitration Panel that prompted the arbitrators to award $1.5 million in punitive damages -- an amount treble the $500,000 in awarded compensatory damages?

In rendering its punitive damages award, the Panel explains to us that it based that action on an apparent determination that Ameriprise had engaged in "such recklessness or negligence as to evince a conscious disregard of the rights of others." Oh, gee, now that's truly helpful. What constituted Ameriprise's "recklessness?" We aren't told. What constituted Ameriprise's "negligence?" We don't know.

Finally, let's be clear as to how outrageous Respondent Ameriprise's conduct was in this particular customer arbitration. For starters, the FINRA Arbitration Panel found that the member firm:
  • failed to cooperate; 
  • failed to produce discoverable materials; and 
  • knowingly violated an Order of the FINRA Arbitration Panel's Chair.
In addition to citing Ameriprise for the above contemptuous conduct, the Panel awarded against the firm both $1.5 million in punitive damages and nearly $37,000 in attorneys' fees. Did the FINRA arbitrators refer this matter to FINRA's regulators for an investigation? Did FINRA institute a regulatory investigation on its own volition? Are there no consequences for industry members when the rules of mandatory customer arbitration are not observed? Does the regulatory side of FINRA review the organization's Arbitration Decisions in order to monitor the possible misconduct of its member firms?