U Can't Touch This PERFECT FINRA Suitability Arbitration Decision

December 15, 2017

It's Hammer Time! A FINRA arbitrator just penned a Decision about a suitability case that's so close to perfection that . . . well . . . you know . . . u can't touch this!!  Ya got yer content. Ya got yer context. Ya got understandable explanations. Frankly, the BrokeAndBroker.com Blog's publisher Bill Singer is having a throw-back Friday and dancin' around in shiny gold Hammer pants. Bill's bustin' quite the lawyerly moves this morning. Okay, so, sure, not exactly a sight for sore eyes but at least Bill didn't arrive to work today astride a horse called Sassy. 

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2017, public customer Whittaker, representing herself pro se, asserted breach of fiduciary duty; manipulation; misrepresentation/non-disclosures; omission of facts; and suitability in connection with her investment in an unspecified common stock. Claimant sought $20,000.00 in damages plus $2,000.00 for paid commissions.In the Matter of the FINRA Arbitration Between Diane I. Whittaker, Claimant, vs. Ameriprise Financial Services, Inc., Respondent (FINRA Arbitration 17-00873, December 11, 2017).

Expungement Request

Respondent Ameriprise generally denied the allegations and asserted various affirmative defenses. Respondent requested the expungement of the Central Registration Depository records ("CRD") of unnamed party Douglas D. Dinzik  in accordance with FINRA rules.

A Matter of Tolerance

The FINRA Arbitration presents a fairly typical she-said-he-said suitability dispute in which Claimant Whittaker says that she desired only moderately conservative investments and cites her history of investing in money market accounts to buttress her contentions about her risk tolerance. At first, Claimant's account seems to have performed as expected but by March 2016, she began complaining about her investments, which she asserted were invested in a  more speculative manner than she authorized. 

An Eloquent Explanation

At this point,  I typically embark upon what often amounts to a translation of a given FINRA Arbitration Decision, in which I attempt to explain the underlying fact pattern and rationale through the use of phrases such as  "in other words" or "as implied" or "as I infer," or "I'm not quite sure what the hell this arbitrator is trying to say here but . . . " In today's BrokeAndBroker.com Blog, however, I will allow a beautifully crafted - eloquent, I might say - FINRA Arbitration Decision to speak for itself. If FINRA used more arbitrators with the writing skills of this panelist, I would have very little to complain about when it comes to the arbitration forum's lack of content and context in its published materials.  In pertinent part, the sole FINRA Arbitrator offers this lucid explanation of the case and the basis for her award:

The parties agree Claimant and Dinzik met in January 2015 to open the accounts. However, Claimant denies discussing a percentage of return as stated in Claimant's June 16, 2016 letter and this was not refuted in any way by Dinzik's Affidavit. Even Claimant's handwritten notes do not reference the rate of return. Claimant was given a 52-page proposal which stated risk tolerance as moderately conservative, not moderately aggressive. Also, the June 2015 proposal to Claimant states her risk tolerance is "moderately conservative." It does not state it is "aggressive."

Dinzik states that "Ms. Whittaker was pleased with her stated risk tolerance, investment objective and the performance of her accounts until early 2016." (Diznik's Affidavit paragraph 24) However, this allegation is refuted by the fact that Claimant met with Dinzik in June 2015 and in October 2015. Also, Dinzik states he "reached out to Ms. Whittaker to discuss current market conditions, the cyclical nature of the market, and the diversification of Ms. Whittaker's portfolio." However, he does not provide a date as to when he reached out to Claimant. His Affidavit is lacking as to specifics of this "reach our, especially when Claimant has been writing letters to Respondent complaining since March 22, 2016.

Claimant makes the point that she is a 63-year-old female with some experience with investments and Dinzik did not listen to her needs. If Claimant had invested in money market accounts for five years why would she suddenly want to invest aggressively? If such were the case, why didn't Respondent provide notes or detailed information as to this strategy and approval? Further, there is no mention as to the procedure followed as to execution of documents. The only page signed by Claimant is the last page. Upon review of the documents, Dinzik signed the document the day after Claimant. Why would he do that if he completed the form and had her sign the document on January 13? Perhaps for the future, clients should initial the bottom of each page and then there can be no issue as to what was provided and what was given to the client and what was executed. In Respondent's Answer it states, "Mr. Dinzik explained the characteristics of SPS Advisor Accounts as well as the associated fees. He presented the entire SPS Advisor Account Application to the Claimant." In reviewing the signature pages for the two account applications, the dates are different. Since it is Respondent that has the responsibility and duty to maintain documents, any discrepancy is viewed in favor of Claimant and against Respondent.

Further, Respondent sends out letters to Claimant on January 16, 2015 and March 20 2015 but does not perform any type of follow up. Claimant stated she was out of town and did not receive the letters. The first letter is sent out two or three days after the account is opened (depending on when Dinzik signed the documents - January 14 on one and no date on the other.) Claimant does not respond to the letter and it is resent two months later. Again, Claimant does not respond. The parties agree that there is contact in June 2015. Claimant states she objected to the aggressive risk classification and while Mr. Dinzik's Affidavit contradicts it, there are no specifics as to the when or how he informed Ms. Whittaker of the potential risks and her agreement to possess a moderate/aggressive risk tolerance.

While Respondent's counsel has raised many issues on behalf of his client, he cannot overcome the fact that Dinzik's investment strategy was moderately aggressive which was not suitable for Claimant. Further, Respondent's records and policies did not help their defenses.

Clearly there was a misunderstanding as to the investments. However, weighing all the evidence presented to the Arbitrator, Claimant has proven her case and the award is in favor of Claimant. The Arbitrator found that the investments were unsuitable, and the application signature page is troubling with respect to when it was executed by each party - Dinzik definitely signed one application the day after Claimant. Since Claimant is pro se and had begun her written complaints as early as March 2016, Respondent has had more than ample time to explain any discrepancies. Some latitude is given to non-attorneys. This is not a case of the market going down and Claimant being upset. This is about Claimant being concerned her investments are not correct and are too aggressive, and nothing being done to alter or change the investments. . . .


The sole FINRA Arbitrator found Respondent Ameriprise liable and ordered it to pay to Claimant $20,000 in compensatory damages and $2,000 in commissions plus interest until paid in full and $212.50 reimbursement for filing fees. The requested expungement of Dinzik's CRD was denied.

Bill Singer's Comment: U Can't Touch This!

Wow!!! Would someone please pin a medal on the Arbitrator and add a couple of oak clusters to the decoration. Also, howsabout the arbitration forum reprint this award and send it around to all of its arbitrators as a pristine example of what a Decision should look like.  It's Hammer time. U can't touch this.