FINRA arbitrations often involve the old "he-said-she-said." That's to be expected because at the core of many disputes are two very different versions of the same event. After the FINRA arbitration hearing concludes and the arbitrators pen their Award, we expect some explanation as to what was found and why -- and a brief explanation as to how a given award was calculated. In reality, more often than not, FINRA's published Arbitration Awards are lacking. Lacking in facts. Lacking in content. Lacking in context. Lacking in anything amounting to a satisfactory explanation. See today's featured public customer arbitration for an example.
In a FINRA Arbitration Statement of Claim filed in August 2020, public customer Claimant asserted breach of fiduciary duty, negligence, professional negligence, violations of law, unsuitable recommendations, negligent supervision, breach of contract, and breach of securities industry rules and regulations.
In the Matter of the Arbitration Between Dominic Ismert, Individually and on behalf of his Designated Beneficiary Plan/TOD, Claimant, v. Charles Schwab & Co., Inc., Respondent (FINRA Arbitration Award 20-02864)
Claimant alleged that Respondent Schwab "gave flawed investment recommendations, and his investment strategy was subjected to unnecessary concentrations of risk, a factor not disclosed to him at the time of the recommendations."
At the hearing, Claimant requested $546,395.09 in compensatory damages, $20,000 in expert fees, punitive damages, interest, and fees.
Respondent Charles Schwab generally denied the allegations and asserted affirmative defenses.
The FINRA Arbitration Panel found Respondent Charles Schwab liable and ordered it to pay to Claimant $144,000 in compensatory damages plus interest and $425 in filing fee.
Yet another in a seemingly unending line of pathetic FINRA Arbitration Awards. I'm sorry but there's just no way around that criticism. Follow the link and read the Award yourself.
You have a public customer Claimant seeking over half a million dollars in damages for allegedly "flawed investment recommendations" against one of Wall Street's household names and among FINRA's largest member firms. Despite the FINRA Arbitration Panel finding that Charles Schwab was liable, there is no explanation provided in the FINRA Arbitration Award as to what, if anything, the firm did wrong; and, adding insult to injury, there is not explanation as to why the Panel awarded about one-fourth of what the prevailing party sought.
As I often note when criticizing these uninformative FINRA Awards, I am not suggesting that the arbitrators got anything wrong. For all I know, Claimant was entitled to only $144,000 in compensatory damages and the Panel discharged its mandate with great efficiency and rectitude. But, y'know, you can't just offer up an Award without some content and context so as to explain the Award. I understand that among the attractions of FINRA's mandatory form of arbitration is a massive blast of confidentiality that manifests itself in the form of a minimalistic Award. Still -- even a minimalistic Award requires some disclosures so as to render it even something amounting to "minimal."
Today's featured FINRA Arbitration Award sets out what Claimant alleged but not what the Panel specifically found.
The FINRA Arbitration Panel awarded compensatory damages but fails to tell us what they are compensation for and how the arbitrators calculated the amount. Inexplicably, FINRA does not require some explanation as to how a panel of arbitrators calculated a given award. In today's featured case, we have a demand for over $500,000 in comps and an Award of $144,000. Like, y'know, maybe, y'all could just pen a sentence or two explaining how the hell you came up with that lesser number?
FINRA Arbitrators Award Customer $144,000 Against Charles Schwab Amid Allegation of Flawed Investment Recommendations (BrokeAndBroker.com Blog)
FINRA Arbitrator Denies Indemnification Citing Firm's Failure to Supervise (BrokeAndBroker.com Blog)
Calling All Unreasonable Wall Street Professionals by Bill Singer Esq
‘Phishing-as-a-service’ kits are driving an uptick in theft: What you can learn from one business owner’s story (CNBC by Dawn Giel)
Criminals use Telegram to recruit ‘walkers’ as America’s big banks see an 84% increase in check fraud (CNBC By Eamon Javers and Paige Tortorelli)
CEO Of Security Company Sentenced To Five Years In Prison For International Boiler Room Fraud Scheme (DOJ Release)
Former Coinbase Insider Pleads Guilty In First-Ever Cryptocurrency Insider Trading Case / Ishan Wahi Tipped His Associates Regarding Crypto Assets That Were Going To Be Listed On Coinbase Exchanges (DOJ Release)
2023 SEC EXAMINATION PRIORITIES / SEC Division of Examinations
Former Convicted Felon to Pay $24 Million to Settle SEC Charges for Operating a Ponzi and Pyramid Scheme (SEC Release)
SEC Charges Las Vegas Resident in Crypto Fraud Targeting Filipino Community in California (SEC Release)
SEC Charges Pennsylvania Investment Adviser with Multi-Million Dollar Fraud (SEC Release)
It's Not Sewer Service But SEC Enforcement's Effort to Serve Ex-Inmate Deemed Falling Short
In the Matter of Charles K. Topping (SEC Order Denying Motion to Deem Service Complete)
FINRA Fines and Suspends Rep For Changed Rep Code
In the Matter of Robin Bailey Liebes, Respondent (FINRA AWC)
FINRA Censures and Fines For Untimely Private Placement Filings
In the Matter of Rosenblatt Securities Inc., Respondent (FINRA AWC)
FINRA Censures and Fines Sage Trader For AML Issues
In the Matter of SageTrader, LLC, Respondent (FINRA AWC)
FINRA Fines and Suspends Rep For Improper Meal and Transportation Expenses
In the Matter of Jong Ik Lee, Respondent (FINRA AWC)
FINRA Censures and Fines BNA Wealth For Conducting Unregistered Muni Biz Without Muni Principal
In the Matter of BNA Wealth, Inc., Respondent (FINRA AWC)
A New Tool for Compliance: FINRA’s Machine-Readable Rulebook Initiative (FINRA Unscripted)