In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2010, Claimant John Mason (proceeding pro se) sought damages of not less than $100,000 arising from Respondent UBS's alleged failure to sell shares of foreign stock that he delivered to the firm. Respondent UBS generally denied the allegations and asserted various affirmative defenses; and moved for an Expungement on behalf of non-party John Combs. In the Matter of the Arbitration Between John A. Mason, Claimant, vs. UBS Financial Services Inc., Respondent (FINRA Arbitration 10-01085, April 26, 2011).
This FINRA Panel is to be commended for providing the rationale for its decision.
As a threshold determination, the Panel determined that UBS had fostered a reasonable belief on Claimant's behalf that it would undertake to sell his foreign stock. Accordingly, Claimant delivered the subject stock certificate. However, rather than engage in a good-faith effort to perform the promised sales,the FINRA Arbitrators found that UBS failed to take any steps to sell Claimant's stock for about 7 weeks. Thereafter, UBS returned the unsold certificate to Claimant.
SIDE BAR: Okay, so, what we have here appears to be the old runaround.
If you've ever dealt with any large financial services organzation - bank, insurance company, brokerage firm - you have likely experienced the supreme frustration of being told that they are going to do something, being told that they are doing it, being told that they are still doing it, being told that there was a snafu in some back office but that what they told you they were doing will now get done, and, finally, getting some lame apology for why what they told you that they could absolutely do they now realize that some idiot promised you something that the company can't and/or won't do and, hey, what can we tell ya? Sorry but it ain't gonna happen.
Claimant Mason seems to have gotten the old runaround with oak leaf clusters from UBS. In Mason's case, he got the seven-week deluxe version. Unfortunately for UBS, Mason wasn't one of the customers who simply took his lumps and sulked in silence. Mason was convinced that if UBS had timely informed him that it couldn't/wouldn't sell his foreign shares, he would have found another brokerage firm to get the transaction done - and an earlier sale would have realized a higher price than what he eventually obtained after the seven-week delay.
Notwithstanding Claimant's theory of damages, the problem with speculation is that it's often tough to prove what you would have, could have, or should have made - not impossible to prove but it can be quite a challenge.
Maybe UBS had a legitimate reason for not being able to sell Claimant's shares and, as such, maybe no other brokerage firm could have effected the trade any quicker or at a better price - none of which would excuse UBS's giving Claimant the runaround. Maybe the market for Claimant's shares was very illiquid and not amenable to a finding that but for UBS's delay that he would have realized a better execution. We can ruminate endlessly.
Ulimately, the question is whether Claimant could prove to the FINRA Arbitrators that the proceeds from his delayed sale of his foreign certificate resulted in less money than a more timely sale at another firm would have, could have, or should have.
In considering Claimant's request for not less than $100,000 in damages, the FINRA Panel found that claim to be:
at best, speculative. Notwithstanding the speculative nature of Claimant's damages, the Panel awards Claimant the sum of $13,000.00.
Separately, the Panel denied the requested expungement of John Combs's record.