You Hear The One About The FINRA Arbitration Involving The Stockbroker With 36 BrokerCheck Disclosures?

April 26, 2018

You're an angry public customer. You think that your stockbroker stole $50,000 of your retirement funds. No . . . that jerk didn't lose it in the market or playin' the ponies. From what you heard, he simply deposited your hard-earned money into a bank account under his control. Frankly, you sort of wish it were more exotic but, what's that line about the banality of evil? In any event, you've also heard that the stockbroker likely blew all your cash and probably all his too -- regardless of what you're hearing, the guy worked at a broker-dealer and their sign is still lit and their doors still open. So, why waste time and play games going after the employee when the employer may have the deep pockets? 

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2017 and as amended thereafter, public customers Claimants Catherine and William Knight asserted negligence; violation of Michigan Blue Sky Law; breaches of contract and of fiduciary duty; fraud and misrepresentation; respondeat superior; omission of facts; suitability; and failure to supervise. The causes of action were in connection with the alleged fraud perpetrated on Claimants by Third-Party-Respondent Romer as a result of his purported deposit of a check meant for their retirement account into a business account under his control during his employment by Respondent Corecap Investments. Claimants sought $50,000 in compensatory damages and in punitive damages, $2,648.58 interest, $17,500 in attorneys' fees, and costs. At the end of the hearing, Claimants withdrew their punitive damages demand. In the Matter of the FINRA Arbitration Between Catherine J. Knight and William K. Knight, Claimant, vs., Corecap Investments, Inc., Respondent/Third-Party Claimant vs. Ernest Julius Romer, Third-Party Respondent (FINRA Arbitration 17-01082, April 24, 2018

Respondent Corecap Investments generally denied the allegations, asserted various affirmative defenses, and filed a Third-Party Claim against Romer alleging that he was solely responsible for Claimants' losses as a result of his alleged theft of their check, and, as such, should be required to pay any award entered against the firm.

Third-Party Respondent Romer did not sign a Submission Agreement, file an Answer, or appear at the hearing.


The sole FINRA Arbitrator found Respondent Corecap Investments liable to and ordered the firm to pay to Claimants $50,000.00 in compensatory damages plus interest. Also, the Arbitrator found Third-Party Romer liable to and ordered him to pay to Third-Party-Claimant Corecap $50,000.00 in compensatory damages plus interest. Finally, the Arbitrator ordered Romer to pay to Claimants $975 as reimbursement for their FINRA filing fee.

Bill Singer's Comment

An interesting Award in that the Arbitrator could have found Corecap and Romer jointly and severally liable but opted to hit Corecap with the obligation to directly pay $50,000 to the Knights, and then left it up to Corecap to collect on its own $50,000 award as against Romer.  You hired him, you go after him.

Online FINRA BrokerCheck records as of April 26, 2018 for Romer disclose that he was was first registered  in 1993, was in the industry for 23 years with 9 different FINRA member firms, and is now barred by FINRA. BrokerCheck discloses that on July 17, 2017, FINRA imposed a Bar upon Romer for his alleged failure to respond to the regulator's request for information.

I often detail a given individual's or firm's BrokerCheck disclosures but given the number involved with Romer, I will merely opt for a recitation of their categories:

  • 5 final regulatory events; 
  • 15 pending customer disputes;
  • 5 final customer disputes, 
  • 2 pending investigations, 
  • 4 final terminations, 
  • 2 final financial disclosures, and 
  • 3 pending judgment/liens. 
What a prodigious balance sheet! All of which might explain Romer's peripatetic wandering among 9 different FINRA member firms. Although I have not offered a narrative about the 36 disclosures above, I will briefly note that BrokerCheck discloses that CoreCap Investments discharged Romer on January 20, 2017, pursuant to allegations that:

Failure to report outside business activity and violations of firm policies relating to transactions with clients.

In addition to the above commentary, the firm posted this statement:

Romer obtained loans from three clients for the stated purpose of starting a business; he was instructed to return the funds and not to engage in the business. To the firm's knowledge, no funds have been returned as of the date of this filing.