FINRA Arbitrations: The Audacity of Hope?

December 15, 2010

Okay, so, not every case that catches my attention does so because of the seriousness of the allegations or the stunning dollar amount of the damages sought. No, sometimes I simply smile (and on rare occasions, even laugh) when I read the complaint. Take these two Financial Industry Regulatory Authority (FINRA) arbitrations:

Rikki Lost the Number

Public Customer Deborah A. Moller sued her brokerage firm Scottrade Inc. and sought at least $3,054 in compensatory damages and $5,000 in punitive damages. In the Matter of the Arbitration Between Deborah A. Moller, Claimant, v. Scottrade Inc., Respondent (FINRA Arbitration 10-02289, December 9, 2010).  Scottrade was represented by legal counsel. Moller represented herself -- which may somewhat explain the outcome of this matter.

In dismissing Moller's case, the FINRA Arbitration Decision offers us this brief -- seemingly tongue in cheek -- explanation of her grievance:

Claimant alleged damages as a result of Respondent's failure to notify her that she could have placed her order by phone.  The cause of action relates to AIG common shares.

An Obama In the Hand May Not Be Worth A Bush?

In a FINRA Arbitration Statement of Claim filed in September 2009, public customers Rusell and Gloria Erkkila sued Wells Fargo and their stockbroker Timothy Baltzer for allegedly investing their IRA funds in an unsuitable manner. Claimants ultimately sought at least $269,500.00 in compensatory damages plus costs/fees. In the Matter of the Arbitration Between Rusell E. Erkkila and Gloria Erkkila, Claimants, vs. Wells Fargo Advisors, LLC, and Timothy W. Baltzer, Respondents (FINRA Arbitration, December 7, 2010).

Like I said, nothing earthshaking here -- a fairly garden-variety case involving unhappy clients.

What does set this case apart for me was this statement in the official FINRA Arbitration Decision.

Claimants asserted that they advised Respondents that they wanted their investment accounts effectively frozen in place until President Bush left office and they could see how the economy was going to react after the administration change, and that their investment goal was preservation of capital. Claimants alleged that Respondents did not follow Claimants' instructions and invested their IRAs unsuitably in unspecified stocks and bonds.

OOOOOOOOOOOOkay, ummm, yeah. Right. Sure. Got it. 

Not unsurprisingly, the Respondents generally denied the allegations and countered that Claimants had knowingly assumed the risk of their loses, and that all recommendations were made to Claimants in good faith. 

I would be less than candid with you if I pretended to be surprised that the FINRA Arbitration Panel denied Claimants' claims and dismissed the case with prejudice.

Might I recommend to Claimants this book, which I think underscores the nature of their case:

And feel free to listen to this tune while pondering the Moller case: