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TD Ameritrade Loses FINRA Customer Arbitration Citing Inaccurate Statements and Forced Liquidation
November 9, 2022
A lowly pro se Claimant took on one of FINRA's Big Boys in an arbitration seeking less than $9,000 in alleged damages. Why didn't TD Ameritrade just settle the damn lawsuit and be done with it? I don't know and the FINRA Award doesn't explain. Another thing left unanswered is why the winning customer got about half of what he asked for, why he was allegedly forced to liquidate his account, and why FINRA imposed fees upon this victorious small fry.
Case in Point
In a FINRA Arbitration Statement of Claim filed in March 2022, public customer Claimant Birkes, representing himself pro se, asserted that Respondent TD Ameritrade's "agent gave him inaccurate statements concerning his account that led to a forced liquidation." Claimant Birkes sought $8,566.20 in compensatory damages.
In the Matter of the Arbitration Between Brian Christopher Birkes, Claimant v. TD Ameritrade, Inc., Respondent (FINRA Arbitration Award 22-00493)
https://www.finra.org/sites/default/files/aao_documents/22-00493.pdf
Respondent TD Ameritrade generally denied the allegations.
Award
The sole FINRA Arbitrator found Respondent TD Ameritrade liable and ordered it to pay to Claimant Birkes $4,295.50 in compensatory damages and $75 in filing fees.
Bill Singer's Comment
Claimant Birkes wasn't represented by legal counsel. The pro se customer's victory is all the more impressive given that TD Ameritrade was represented by a lawyer.
Not Knowin' When To Fold
There must have been some merit to Birkes' allegations because the sole FINRA Arbitrator awarded him a tad over $4,300 in damages/fees. Which makes you wonder why the hell TD Ameritrade didn't just settle with the disgruntled customer. There could be a number of explanations, but the fact is that Birkes sought only $8,566.20 in damages. Yeah, I know, every customer says that it's "only" X dollars no mater how small or large the demand. On the other hand, how much did TD Ameritrade spend in legal fees, costs, and expenses to defend against the $8,566.20 demand for damages?
Assessments
Talking about fees, costs, and expenses, let's consider the charges that FINRA assessed upon the parties as set forth in the Award:
- Initial Claim Filing Fee: $325 (non-refundable and refundable portions)
- Member Surcharge: $325
- Hearing Session Fees: $250 (pre-hearing) and $250 (hearing)
Now let's break those charges down.
The losing party, TD Ameritrade, was assessed a $325 Member Surcharge and $250 in hearing session fees.
The winning party, Birkes, was assessed a $325 filing fee against which the FINRA Arbitrator ordered TD Ameritrade to pay the $75 non-refundable portion -- leaving Birkes on the hook for $250 in filing fees. Also, the Arbitrator assessed $250 in hearing session fees against Birkes.
Why the hell should a pro se public customer have to pony up $250 in filing fees and $250 in hearing session fees when the Arbitrator found in his favor for the piddling amount of $4,300? Those assessments equal about 12% of the customer's Award. Why didn't the Arbitrator transfer those costs to TD Ameritrade? Seems to me those questions deserved a brief, perfunctory explanation in the Award; however, in keeping with FINRA's penchant for playing hide-and-seek with the explanations and rationales in its Arbitration Awards, we got nothing in the way of guidance. In keeping with that criticism, given that Birkes was a pro se party going up against one of FINRA's largest member firms, I think it would have been appropriate for the Award to explain how/why the $8,566.20 in requested damages was whittled down by the Arbitrator to $4,300? Sure -- there may be any number of fair, sensible, and compelling answers. I would have loved to read about any one of them.
Just A Few Words of Explanation?
The Award offered us a minimalist explanation as to Birkes' Claim: "Claimant alleged that Respondent's agent gave him inaccurate
statements concerning his account that led to a forced liquidation." Given that we have a
- pro se customer AND
- a humongous Respondent FINRA member firm that forced the customer to go to a hearing in lieu of settlement AND
- an Award in favor of the customer BUT
- the Award is about half of what the customer sought