TAMPA – A Florida-based firm has been awarded over $1 million following a Financial Industry Regulatory Authority (FINRA) arbitration.
Goodman & Nekvasil, P.A. won a FINRA
arbitration award against Source Capital Group on
Feb. 3 while working on
behalf of three retirees, William B. Lashlee and Keith and Joyce A.
McCrea. Lashlee is an 88-year-old retired native of St. Simons
Island, Georgia, and the McCreas are a retired couple who live in
groups alleged they were sold unregistered and unsuitable investments
in IPG stock by Joseph Hooper, who was working as a representative. Lashlee invested $220,000 and the McCreas invested
$590,000 for a combined total of $810,000 in IPG stock. Their problems peaked in January 2013 when IPG filed for bankruptcy, and
both Lashlee and the McCreas lost their investments, the law firm said.
groups alleged that Source Capital displayed negligent behavior when
the company failed to provide adequate supervision to Hooper, who was
assigned to a Bowling Green, Kentucky, Source Capital branch office. According to the complaint, Goodman & Nekvasil alleged the local
office manager was derelict in his duties by failing to take proper
responsibility for Hooper's behavior.
resolve this dispute, both parties turned to FINRA, a nonprofit
organization that works to ensure that rules and regulations are
enforced in the financial sector and provides conflict resolutions
through mediation and arbitration for securities-related disputes,
Michele Ong, director of media relations at FINRA told the Florida
specializes in cases that involve arbitrations and mediation between
securities companies and their customers,” she said. “Most
securities organizations make an agreement with their investors where
they both decide to resolve any disputes between them first through
mediation and if that fails then through binding
arbitration.Typically, the steps involved require the
participating parties to agree to a list of arbitrators, which is
then followed by a discovery process.”
FINRA arbitration panel found in favor of Lashlee and the McCreas and awarded
them $810,000, the cost of their out-of-pocket losses. In addition, the panel awarded them the cost of their prejudgment interest on the
lost sum, totaling $66,989.04 for Lashlee and
$80,239.73 for the McCreas.
“I would say it is fairly uncommon for
a case to go all the way to arbitration award,” Ong said. “My
guess is that roughly 80 percent of them settle before this phase.”
panel also assessed Source Capital with $20,000 in sanctions for its
violation of the its discovery orders, and then fined the company
again for $24,630.36 in costs and $250,000 in
“The FINRA arbitration panel determines how to
assess fault by working as neutral observers making sure that
everyone involved follows the agreed upon arbitration code,” Ong
said. “Then the panel decides on the final arbitration award and
announces it to the public.”
final total award to both parties equaled $1,104,630.36.
award shows that arbitration panels will make broker-dealers pay when
the evidence shows a complete breakdown of supervision," Kalju Nekvasil of Goodman & Nekvasil said.