In an arbitration award dated June 27, 2017, a three-member panel awarded Oregon investors Scott and Jan Tullis $192,103 in damages and interest against Ameriprise Financial Services, Inc., and its broker, Andrew Joseph Hall. Hall worked in Portland, Oregon.
The panel gave a one-paragraph explanation for the award. The panel determined that respondents engaged in unsuitable trading in 2014 by placing the Tullis’ investments, which had formerly consisted of 70% equities, into 100% equities; with the use of leveraged closed-end funds, that percentage rose to 133%.
The unsuitability of Ameriprise’s investment strategy only worsened in 2015, when the respondents placed 50% of the Tullis’ investable assets in one unit investment trust (“UIT”) which consisted of stocks and closed- end funds invested energy sector master limited partnerships (“MLPs”).
The claim asserted damages of $195,044.41. The panel awarded damages of $191,772 plus interest from the date of the award until payment of the award.
The panel also denied Hall’s request for expungement of the disclosure of this claim on his CRD customer dispute history.
There is a twist to this award. One of the arbitrators dissented from the decision in that he felt interest should have been award to the claimants going back to May 2016. He then went on to give his own “reasoned” decision for the award, almost eight pages long, stating that he felt most arbitration awards should outline the arbitrators’ reasoning “to create a body of precedent unavailable now….”
This arbitrator described the claimants’ personal financial situation in detail, including extensive credit card debt, business setbacks and paying for the college education of two children. But Mr. Tullis, in a stroke of good fortune, inherited $800,000 from a deceased relative. However, rather then pay down several hundred thousands of dollars of debt, Tullis actually increased his debt and leased an expensive new car, all the while expecting his new found wealth to pay off his debt and make him a millionaire at the same time. According to the arbitrator, that scheme was never going to succeed – and Ameriprise and Hall should have known that.
The arbitrator went on to find that because of the claimants’ financial naiveté, a fiduciary relationship arose between the claimants and Ameriprise/Hall. He further determined that the respondents failed to properly advise the claimants how to handle the inheritance. Rather, they chose to help the clients maintain the large corpus of the inheritance, thereby enlarging the potential for commissions, fees, etc., being generated for the benefit of Ameriprise and Hall.
This arbitrator’s decision cites FINRA rules, Oregon law and gives a detailed analysis of the arbitrator’s reasoning. It is worth reading in full.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
