SIDE BAR: Although the FINRA Arbitration Decision asserts that an Amended and a Second Amended Statements of Claim were respectively filed in February and April, 2018, oddly, there is no assertion of the filing of the initial Statement of Claim.
1. Respondent is liable and shall pay to Claimant the sum of $17,600.00, our estimate of the realized amount she has been shortchanged in FAP payments up to the date of this award. The FAP agreement remains in effect.2. In the alternative, Claimant may formally surrender her rights to all future payments under the FAP agreement by filing her notice of surrender with FINRA within 10 days of the date of this award. Such surrender must state that she surrenders all rights to future payments under the parties' FAP contract upon payment to her of $131,820.00, which she accepts as full and final payment of all Respondent's remaining payment obligations under the FAP agreement. Upon such filing, Respondent is liable and shall pay to Claimant the sum of $131,820.00, our calculation of the unrealized amount she is due for the remaining agreement term over and above the amount she has already received, which payment shall discharge Respondent's obligation to make any further payments. The FAP agreement shall remain in place and effective for its term in all provisions other than payments.3. Claimant's age and gender discrimination claims are denied in their entirety.4. Any and all claims for relief not specifically addressed herein, including attorneys' fees and punitive damages, are denied.
Claimant, for 22 years a Financial Advisor ("FA") at Respondent, retired effective December 31, 2017, having agreed to participate in Respondent's Former Advisor Program that promised continued participation in revenues generated by her core book of business remaining at Respondent, on a sliding percentage basis over a five-year period. Pursuant to Respondent's policy, her accounts were distributed at retirement to other FAs in her office who had agreed to participate in the FAP. Unfortunately, due to an error by a Complex Administrator, the distributed accounts were not "swung" into the FAP where Claimant could participate in revenue generated by them. Respondent contends this error was eventually corrected, a retroactive amount for the payments missed was applied, and Respondent argued that Claimant has received and is receiving all payments due under the FAP.Claimant contends that she could not have received all amounts due because the amount she received is significantly smaller than past revenue generated by her accounts would indicate. Respondent's witness attributed this difference to market conditions and differing FA investment styles, among other factors. Claimant argued, based on several occurrences prior to and after her retirement, that some accounts were diverted from the FAP or that the error in swinging the accounts into FAP was not completely corrected, preventing her receiving the revenue to which she is entitled.Claimant received an amount for 2018 that is approximately one third of the amount she would have received if 2018 revenue had been equal to 2017 revenue, which was itself considerably less than 2016 revenue. There is no indication that Claimant's book changed significantly over these years, although there could have been some changes after Claimant's retirement. The record is devoid of evidence that would allow us to determine, in any detail, what any changes might have been. It appears to us that a two thirds shortfall in revenue is more than any expected changes could account for. Consequently, we find that there is some impediment still in allocating to Claimant the retirement benefits to which she is entitled under her FAP agreement, and that the agreement has been breached by Respondent.Based on our review of the testimony and exhibits of record submitted in a two-and one-half day evidentiary hearing, the Panel calculated Claimant's losses incurred and to be incurred in the remaining FAP period to be $131,820.00.
Class A Share Front-End Charge Regulatory Damage In the Matter of ProEquities, Inc., Respondent (FINRA AWC)