Two recent FINRA arbitration cases have hit the news this week.
In one case, a FINRA arbitration panel awarded $1.1 million in legal fees to Stifel Nicoloaus & Co. and four brokers after they were sued by Wachovia Securities, LLC. The case, a raiding case, related to Stifel's employment of four former South Carolina A.G. Edwards brokers who left AGE after it was acquired by Wachovia. The legal fees awarded to the defendants in this case were based on South Carolina's Frivolous Civil Proceedings Act. In an interesting move, the panel also apparently ordered that Wachovia inform a U.S. federal court, from which it reportedly obtained a retraining order against the brokers, that representations made in court were not supported by evidence Wachovia reportedly claimed supported their request for the court's intervention. You can read InvestmentNews' report on this arbitration case here.
In another case, a FINRA arbitration panel ordered StockCross Financial Services, Inc. and two brokers to pay approximately $319,000 in compensatory damages, about $959,000 in damages for elder abuse, as well as about $234,000 in attorney's fees plus additional sums for costs, in a case where an elderly investor alleged that the brokers recommended unsuitable and overly risky investments for him, including recommending that he leverage the equity in his home to invest. The panel also imposed sanctions on the respondents for failing to comply with its discovery orders. More on that case can be found here. This case is certainly unusual given the treble damages awarded under elder abuse statutes.
