Raymond James Files To Set Aside $1.7M Arbitration Award
A Financial Industry Regulatory Authority (FINRA) arbitration panel found Raymond James liable to the Claimants and ordered them to pay $1,129,796 in compensatory damages, plus interest on the compensatory damages at the rate of 5% per annum from December 1, 2006 until the award was served on the parties; plus $34,988 for costs and expenses, plus $82,281 in costs for IRS penalties, plus $250,000 in attorneys' fees. (FINRA# 10-02162; Hurshel Tyler and His Wife Mildred Tyler, By and Through Her Power of Attorney Bill Tyler v. Raymond James Financial Services, Incorporated and LPL Financial Corporation). With interest included, the total amount to be paid by Raymond James was approximately $1.7 million.
The original arbitration claim revolved around Mr. Hurshel Tyler and the estate of his deceased wife, Mildred. The elderly couple was in their late eighties and had some $3.5 million in bond funds. According to the case, the couple was advised by a former Raymond James broker to sell the bond funds and invest in variable annuities and variable life policies, which carry high fees, expenses and would generally be unsuitable for people nearly ninety years old.
Now, two months after that award was entered, Raymond James has filed a suit in the 298th Judicial District Court in Dallas, Texas, asking the court to set aside the findings of the FINRA arbitration panel, according to Investment News. In its appeal, Raymond James claimed that the clients should have returned the annuities, which had grown by more than $985,000. However, the panel awarded compensatory damages and were not ordered to return the annuities. The firm also argued that the $250,000 in attorneys' fees ordered should be vacated because of Florida's laws, where Raymond James is located. In arbitration cases, the FINRA arbitrators have the power to order payment of compensatory damages without ordering the Claimants to return the investments and, furthermore, the panel is not required to give any explanation or give any rationale as to how or why they made their final decision.
Often times, a firm may attempt an appeal to set aside an award simply to delay payment of the award, especially if it is a large award like this one. Trial courts are most often not inclined to alter the decision of arbitrators in effort to preserve the integrity of the arbitration process. Only time will tell in this case. A hearing is set on Raymond James' challenge of the award for September 16, 2011.