In Barbara Golds v. LPL et al., I defended LPL against a market maven who wanted the FINRA panel to believe she was taken by one of its brokers. The broker was taken by her in a classic selling away case.
Unsatisfied with her returns at LPL in a time when the market was kicking ass, old lady Golds wanted to try something else. She talked the broker into taking her money out of LPL and putting it into a DVP (delivery versus payment) account, pooled with other investors’ assets at some firm called ETC. ETC was another client of the broker at LPL. So, LPL now had no idea Mrs. Golds was, in a sense, still their client, but it could not supervise specifically what was being done with her money. No matter, really, as all this was her idea, and she was in cahoots with the broker to duck LPL’s supervision anyway. A classic selling away case, but this time the client conspired in the broker’s bad acts.
After some eleven days of contentious, and often crazy hearings, and a review of several thousand emails from Mrs. Golds to and from LPL and to and from the broker on the sly, the FINRA arbitration panel gave LPL the directed verdict I moved for. The emails told the tale. The firm was left untouched, except for its legal fees, and the broker got zapped. Was a shame watching him blubbering on the witness stand when he figured the jig was up. He ended up in bankruptcy. Later, the old lady’s counsel tried to vacate our award in the Eastern District of Michigan. He got smoked. Then, he tried to join a case in the Northern District of Illinois against ETC. That worked out not so well either, I hear.
If your firm finds itself in a selling away scenario, call on experienced counsel to deal with it. The Law Offices of Christopher H. Tovar, PLLC has extensive experience successfully handling these messes.
