Parties Try To Break Each Other's Back in FINRA Arbitration

June 6, 2011

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in July 2010, Claimant Rubin asserted claims for breaches of contract and  of the covenant of good faith and fair dealing in a case involving disputed compensation owed to the Claim under the terms of an

  • Advisor Management Agreement executed by Respondents about January 2003;  and
  • Client Fee Schedule executed by Respondents about June 2006.

Claimant sought the following relief:

1. $36,347.26;
2. Attorneys' fees, costs, and interest as follows:
a) All FINRA Arbitration fines and costs;
b) Interest on the awarded amounts, calculated at 5% simple interest from the date due until nominally 09/30/2010:
Q3/2007: (1086 days) = $505.61
Q4/2007: (994 days) =$1,333.67
Q1/2008: (903 days) =$1,203.88
Q2/2008: (812 days) =$1,075.70
Q3/2008: (720 days) =$597.48
Total: =$4,716.34
3. Treble damages or an additional $72,694.52;
4. Punitive damages;
5. Respondents to supply to Claimant a formal letter of apology for their actions in regard to this claim;
6. Respondents to notify all Take Charge clients that were clients at the time of Claimant supplying services to Take Charge and one year beyond that time, that;
a) Claimant has not provided investment advice for the Respondents since July of 2008, and
b) the FINRA Arbitration Panel determined that Claimant was harmed by the Respondents and that the Arbitrators issued an award to Claimant;
7. Injunctive relief to prohibit the Respondents or related people from making statements to anyone regarding Claimant or his investment management, etc., other that the relief above; and
8. A clear, quick schedule for payment of all amounts awarded Claimant and for the implementation of all other non-monetary actions agreed upon.

In the Matter of the FINRA Arbitration Between Ken Rubin, Claimant, vs. Joan Perry and Take Charge Financial!, Respondents (FINRA Arbitration 10-03433, June 1, 2011).

Respondents generally denied the allegations.


The FINRA Arbitration Panel found Respondents Take Charge and Perry  jointiy and severally liable to and ordered them to pay to Claimant $15,000.00 in compensatory damages with post-judgment interest at the California statutory rate of 10% per annum from the date the Award is served until paid in full. Also, the Panel assessed $6,075 in FINRA hearing fees jointly and severally upon Respondents.

Bill Singer's Comment: First off, what we got here are self-represented (pro se) parties, which generally makes for an entertaining case, if nothing else. Notwithstanding, they all appear to have done a credible job. Some aspects of the case make a veteran lawyer like me wince (and, okay, chuckle a bit too) but at least the parties erred on the side of excess rather than understating their grievances and remedies.  There's not much doubt as to what Claimant Rubin wanted and there's virtually no doubt that he was really furious about Respondents' conduct.

If you eliminate the surplusage from Claimant's demands, you essentially have a case in which Rubin sought about $36,000 in damages. He won a bit less than half or $15,000 with post-judgment interest. The cost of hiring a lawyer could easily have eaten most of (if not the entire) $21,000 shortfall between what Claimant wanted and what he got - so on a net/net basis, not a bad outcome.

As for the Respondents,  it's the mirror image. They more than halved Claimant's monetary demand - and avoided the sought punitive damages and pre-judgment interest.  However, quite a bit of dirty laundry has been washed and is now before the public and the industry, and one can only wonder if this case could have been quietly settled along time ago for something close to the $15,000 awarded.

In the end, given the vitriol and the indications of bad blood, I'm guessing that efforts at negotiating a settlement were little more than "take it or leave it."  I could well be wrong but that's how I read it. These type of cases always seem to result in contested hearings where both parties come away mumbling and grumbling.